British Gas prices rise on 16 November, pushing up the average annual dual fuel bill to £1,336. Photograph: Lewis Whyld/PA

British Gas energy price rise ushers in tough winter for struggling households

This article is more than 11 years old

Co-operative Energy bucks trend with 2% cut in electricity bill as five of Big Six suppliers raise energy prices by early December

British Gas's 8.5 million customers are now paying an extra £80 a year for their gas and electricity, taking the average annual dual fuel bill to £1,336. The price rise, introduced on Friday 16 November, comes just over a week before 3 million npower customers see their gas and electricity prices increase by 8.8% and 9.1% respectively.

Co-Operative Energy has thrown its 60,000 customers a lifeline by slashing the price of electricity. But by early December, five of the Big Six energy companies will have introduced price rises, affecting a collective 25 million households and plunging "tens of thousands" of households into fuel poverty.

The situation could deteriorate further when E.ON announces a widely expected price rise in the next fortnight. E.ON had previously declared there would be no increase in prices in 2012, but is expected to raise prices in line with its competitors as soon as it can, which would be on 1 January 2013. With suppliers required to give 30 days' notice to customers, this would mean an announcement is imminent.

Audrey Gallacher, director of energy at Consumer Focus, said: "Tens of thousands more households will be pushed into fuel poverty by the increases and face difficult choices between putting the heating on or putting a meal on the table."

Consumer Focus research shows that 6m households in England were already planning to cut back on their heating due to bill worries before the price rises were announced.

The Financial Services Authority is currently investigating claims by a whistleblower that the £300bn wholesale gas market has been "regularly" manipulated by some of the big power companies, something that has angered consumer groups.

The Fuel Poverty Action group is to stage a demonstration on 29 November, the day the government releases winter death statistics for last year. A spokesman said: "After what we've heard this week about gas market manipulation, British Gas's price hikes may be the final nail in the coffin for people this winter. This corruption and greed has a direct human cost."

But it's not all bad news for consumers. Co-operative Energy has bucked the trend by announcing a cut in electricity prices of 2% from 21 December 2012. The firm says this makes it £88 cheaper than the average Big 6 online dual fuel tariff and will mean its electricity prices for winter 2012-13 are lower than they were for winter 2011-12. However, while Co-op is cheaper than three of the Bix 6 for dual fuel, it remains more expensive than many other providers, with First Utility and npower the best-buy providers.

Consumer groups greeted Co-op's announcement with relief. Which? executive director Richard Lloyd, said: "This is welcome news from The Co-operative Energy at a time when millions of household budgets are squeezed. Customers being hit hard by big suppliers' price rises should now ask why it is that The Co-operative Energy can buck the trend."

Audrey Gallacher agreed: "It is likely to add more fuel to the fire on consumer questions over whether the price rises from the major suppliers are justified."

Energy regulator Ofgem recently announced plans to force suppliers to inform householders about their cheapest deals and greatly simplify the number of pricing plans as part of what it is calling the biggest shakeup of the market for domestic energy in more than a decade, though consumer groups are urging much greater transparency in the energy industry if customers' lack of trust is to be tackled.

People who are worried about energy costs should first find out if they are eligible for free help with insulation to keep bills to a minimum– either from the Warm Front Scheme or from an energy supplier.

Warm Front offers heating and insulation measures worth up to £3,500 (£6,000 if you need oil central heating), which can cut bills by up to £600 a year. Call 0300 123 1234, visit a local Citizens Advice Bureau, or visit www.direct.gov.uk.

Failing that, check if you are able to get free or discounted insulation from your energy supplier. EDF Energy, for example, is offering free insulation to all customers and a £200 incentive to low-income households that register for free insulation; npower has extended its free insulation deal to all customers. Both the above schemes are still open but be aware that some companies' offers have expired.