First Utility today announced that it is increasing prices for the small proportion of its customers on its First Variable tariff, following a significant increase in external industry and wholesale costs.
First Utility’s First Variable tariff will increase by an average 5.9%, or £5.58 a month, for the typical dual fuel customer. The new annual price will be £1,1991, up from £1,132 and will take effect from 23rd July 2018.
The change is the result of an 9.2% increase in external costs over the past year, made up from a 9% increase in wholesale gas and electricity costs and a 30% increase in costs related to delivering government policies such renewable energy schemes.
First Utility will be writing to affected customers over the next few days to make them aware and to provide details of its cheaper fixed-price tariffs available, as it does every month. There are no exit fees for First Variable customers who wish to change tariff or supplier.
Majority of First Utility customers are on fixed-price tariffs
First Utility only has a low number of customers on the First Variable tariff. Just 20% of customers will be affected by this price change and they will all be encouraged to pick one of its better value fixed-price tariffs. Customers on a fixed-price tariff, prepayment or safeguard tariff will not be impacted.
Ed Kamm, Chief Commercial Officer, First Utility said:
“We’ve always stood for fair and responsible pricing. That means passing on savings to customers when costs drop, but it also unfortunately means we need to increase prices when our costs rise. We’ve seen external costs increase by 9% over the past 12 months and while we have absorbed much of these we regrettably need to change the price of our variable tariff as a result. The vast majority of our customers will not be affected.”
External costs have increased as follows:
|External cost element (inc. VAT)||Year on year Increase|
|Wholesale gas and electricity cost (40% of the bill)
The price paid on the wholesale energy market to buy the energy used by our customers (based on a one year forward hedge)
|Industry policy costs (18% of the bill)
Costs to support renewable energy, efficiency schemes, smart meter programme and help vulnerable customers
|Network costs (26% of the bill)
Costs paid to maintain the pipes and wires that get energy to your home
|Total external cost increase per a typical dual fuel customer||9.2%|
|First Utility cost absorption||-3.3%|
|First Variable customer bill increase||5.9%|
Note: These costs relate to dual fuel, national average costs at Ofgem typical usage comparing the calendar years 2017 to 2018.
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About First Utility
First Utility Group is a challenger energy and broadband provider, operating as a wholly owned subsidiary group of the Shell Petroleum Company Limited (Shell). Currently serving approximately 825,000 homes, the company launched in 2008 to provide an alternative to the incumbent energy providers with good-value energy, great customer service and innovative technology. Over the last ten years it has also helped customers waste less energy through the use of innovative technology that gives insight into individual usage and greater control.
1 Average annual bill based on the typical consumption values of of 3,100 kWh of electricity and 12,000 kWh of gas.