New EDF price rise difficult to justify, says Ofgem
A second price rise in four months for EDF customers has been attacked as "difficult to justify" by the energy regulator.
The head of Ofgem said the new tariffs, which follow increases by other leading energy firms, are further evidence that the energy market is not working in all consumers' interests.
The French-owned company is to increase its dual fuel tariff by 7.2% from June, gas prices by 5.5% and electricity by 9%, affecting 1.5 million customers.
The company, which has 3.3 million customers, said the industry is facing "significant" cost reductions.
EDF announced a 1.2% increase in dual fuel tariffs in December, and has said the combined effect of both changes is 8.5%.
EDF said its standard variable dual fuel direct debit tariff will increase to £1,160 a year - up by £78 - from June 21, the standard variable gas tariff will increase by £29, and the standard electricity tariff by £49.
The combined effect of the increases in December and June on a dual fuel direct debit customer will be £91.
The firm said: "Today's announcement will still leave EDF Energy with the lowest variable gas tariff of all major suppliers. The gas increase follows three gas price reductions over the last two years.
"Deferring the gas price rise until the summer will have saved EDF Energy variable gas tariff customers £16 million since January - the equivalent of £20 per household.
"EDF Energy, in common with all suppliers, has faced a range of rising costs for some time, in both wholesale energy and non-wholesale energy costs and obligations."
Chief executive Vincent de Rivaz said: "I know that price rises are never welcome, but the industry is facing significant cost increases. To be a sustainable and responsible business, we aim to make a fair margin in supplying customers.
"This fair margin allows us to invest for the long term, in particular in good service, innovation and smart metering. It also allows us to help more customers choose the right tariff for them. We have cut all the costs under our control without compromising our customer service.
"We accept that the Government, regulators and consumers groups have concerns about the way markets work for customers, particularly the energy market."
EDF added it was launching a new fixed three-year tariff, at £1,155, until April 2020, with a year's free boiler insurance worth £130.
Dermot Nolan, chief executive of Ofgem, said: "EDF's second price rise in four months, when there has not been a dramatic rise in wholesale energy prices since it last put up prices, is difficult to justify and is further evidence that the energy market is not working in all consumers' interests.
"Energy consumers on standard tariffs risk being taken for granted and we encourage customers to shop around to find the best deal for them.
"Ofgem and the Government are working on a raft of reforms to ensure fairer treatment for consumers and to make the market smarter and more competitive. Today's announcement is further evidence of the need for change."
In March, SSE announced a rise of 6.9% on dual fuel bills, and E.On said it was putting up its standard variable dual fuel prices by an average of 8.8%.
The rises followed moves by other Big Six energy firms to put up costs, with npower hiking prices by 9.8% and S cottishPower by 8%, while British Gas has a p rice freeze in place until August.
A Business and Energy Department spokesman said: "Although millions of people are switching energy suppliers, the majority remain on poor-value standard tariffs.
"This price rise, branded 'difficult to justify' by Ofgem, will hit around half of EDF's customers. It's another sign the market isn't working, and we will shortly set out proposals to help energy consumers as part of the Government's Plan for Britain."
Alex Neill of consumer group Which? said: " This latest price hike is disappointing news for many whose bills are about to shoot up after a short price freeze over winter.
"Customers sitting on EDF's standard tariff should look to switch to a better deal straight away.
"Millions are continuing to suffer due to a lack of competition in the energy market. If energy companies fail to properly engage with their customers to help them find better deals, then the Government and the regulator must step in."