We're bringing prices down

Paul Massara Paul Massara

Paul Massara CEO RWE npower said:

 

"Every customer who saw their prices go up in December will receive a reduction to their annual energy bill."

Good news for npower customers. From 28th February 2014, we're bringing the price of energy down for our domestic customers who received a price increase in December 2013.

We're doing this because, as a company, we'll be paying less towards the costs of energy efficiency schemes, social obligations and network charges. In addition we'll also be passing on a rebate following policy changes outlined by the Government.

Here's a summary of how these changes will affect you:

  • Typically, the changes mean that if your npower prices went up on 1st December 2013 you'll see your annual energy bill come down by £50 (inc VAT, based on a typical average dual fuel customer on a variable priced tariff). This is based on the reduction in our prices which will come into effect on 28th February 2014 and includes the Government's £12 electricity rebate.
  • All electricity customers (including those on a fixed term fixed price tariff) will receive the one off rebate of £12 (inc VAT) in the Autumn of 2014.

Customers on the following tariffs will receive a unit rate decrease from 28th February 2014:

  • Energy Online April 2014
  • Energy Online May 2014
  • Energy Online August 2014
  • Juice
  • Standard Variable

"Every customer who saw their prices go up in December will receive a reduction to their annual energy bill. Typically, this will mean a £50 annual reduction for the average dual fuel customer when the Government's one-off universal rebate is included. All electricity customers whose prices did not increase in December will receive this £12 universal rebate.

This reduction is a reflection of the recent review of two government policies and their impact on household energy bills and it is a welcome start. The natural next step would be to review the impact of all policies that add to business and household energy bills. Tackling the realities of energy costs in this way is a sensible long-term solution to ensure maximum benefit at minimum cost for the consumer.

We also remain committed to give our customers greater certainty with their household budgets. We don't plan to increase energy prices before Spring 2015, unless there are increases in wholesale energy costs or network charges." - Paul Massara CEO RWE npower

Answers to your questions

We say typical customer – what does that mean? open/close

When we raised our prices in December we explained the impact of this by referring to Ofgem's view of a typical average customer, which at that time was someone who uses 16,500kWh gas and 3,300kWh electricity. To be consistent with that and help you relate our price reduction back to the price increase you saw in December, we've used the same definition of a typical customer as we did then.

Ofgem have changed their view of a typical average customer's consumption given a fall in consumption over recent years. From 1st January 2014 this has been changed to 13,500kWh gas and 3,200kWh electricity. From now on this will be the definition we use.

What's the difference between a fixed term variable price tariff and a fixed term fixed price tariff? open/close

Our old fixed term variable price tariffs are discounted to our standard tariff and increased in price in line with increases to our standard tariff made in December 2013 and therefore we're reducing them now. A fixed price tariff is fixed over a fixed term and hasn't changed in line with recent increases.

By how much are bills going down? open/close

For a typical average customer on our standard variable tariff or a fixed term variable price tariff who received a price increase in December, an annual bill will be reduced by £25 (inc VAT) for both gas and electricity (assuming consistent consumption). In order to help the comparison with our price increase in December a typical average customer is someone who uses 16,500kWh gas and 3,300kWh electricity. Going forward we'll be using Ofgem's new view of a typical average customer's consumption.

Ofgem has changed the TDCV (Typical Domestic Consumption Value) to 13,500kWh gas and 3,200kWh electricity. At new notional this reduction is equivalent to an annual saving (resulting from the reduction in tariff rates) of £33 across both gas and electricity. In addition all electricity customers will receive the Universal Rebate of £12 in the autumn of 2014.

What is the one off £12 rebate? open/close

The one off rebate of £12 (inc VAT) will be provided to all domestic electricity bills in the Autumn of 2014. This rebate is being funded by Government to help offset some of the additional policy costs impacting electricity customers.

How many customers will receive the price decrease? open/close

Approximately 2.6million customers. In addition a further 500,000 will receive a one off £12 (inc VAT) rebate.

Which customers won't benefit from the price decrease or one off rebate? open/close

Only approximately 54,000 gas customers on fixed term fixed price tariffs will not benefit from the price decrease or receive the one off rebate from npower. However, if they receive electricity from another supplier they will be paid the £12 (inc VAT) rebate by them.

Why are prices going down at the end of February and not now? open/close

Changes to the Energy Company Obligation have yet to be confirmed. The Government are currently consulting on these changes and changes to primary legislation will be required. In addition, the reduction in network charges isn't expected to come into effect until 1st April 2014.

How will pre-payment customers receive their reduction? open/close

Pre-payment customers will see their unit rates fall the first time they charge their device following the effective date (28th February 2014). The £12 (inc VAT) rebate will be paid as a separate payment as we cannot credit customer accounts.

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