Experts predict more price hikes as Npower ups business tariffs

UK businesses are being urged to prepare for energy price hikes of between 15 and 20 per cent over the next six months after Npower confirmed that it increased business tariffs alongside last week's price rises for domestic customers.

The energy giant announced last week that it was to increase average energy prices for domestic customers by 12.7 per cent for electricity and 17.2 per cent for gas.

Now it has confirmed that it has also increased its business electricity tariffs by an average of 21.5 per cent.

A spokesman for the company said the price hike had been driven by increases in wholesale electricity prices, which have climbed 66 per cent since last February. He added that business gas tariffs had remained unchanged and that just 15 per cent of Npower's business customers would be affected by the changes to electricity prices.

Experts agreed that further increases in business energy tariffs were to be expected across the market.

"We've seen rising tariffs for SMBs [small and medium sized businesses] for the last six months and the indication from the main suppliers is that will continue," said Paul Green, chief executive of energyhelpline.com. "Npower's increases are not a surprise and the other big energy providers are likely to follow suit."

He added that he expected increases in business tariffs of between 15 and 20 per cent to filter through over the next six months.

"There is no end in sight to high wholesale prices," he said. "You'll see some variation but gas is a finite resource so the [price] trend over the next five years will be upwards, while in terms of electricity the shift towards nuclear and renewables will make energy more expensive."

Tariq Akbar, senior energy analyst at research firm Datamonitor, agreed that firms negotiating new energy contracts would see prices rise.

"Business customers are under pressure from suppliers arguing that high wholesale prices will force them to push tariffs up," he said. "I'd expect to see increases in the prices offered through negotiated contracts."

The expected price hikes are likely to increase pressure on firms to reduce energy use and invest in more energy efficient systems, according to Green.

"The high prices are filtering through and impacting behaviour," agreed Akbar. "Firms are monitoring consumption more closely and looking to cut down energy use, as well as investing more time in finding the best deal."