Second EDF price hike 'difficult to justify', energy regulator Ofgem says

EDF (Paris: FR0010242511 - news) is hiking bills for the second time this year, a move that has been described as "difficult to justify" by energy regulator Ofgem.

The French-owned firm, one of the "Big Six" energy firms, said a typical standard variable dual fuel bill would increase by £78 a year, or 7.2%, to £1,160 from 21 June, in a move affecting 1.5 million customers.

Combined with a 1.2% bill increase that took effect earlier this year, it will put a typical household's gas and electricity costs for the year up by 8.5%, or £91 - nearly four times the current rate of wage growth.

Rising energy bills are squeezing households as inflation also bites through the increasing cost of food shopping - while at the same time latest figures show wage growth has been slowing.

Chief (Taiwan OTC: 3345.TWO - news) executive Vincent de Rivaz said: "I know that price rises are never welcome, but the industry is facing significant cost increases."

But the Department for Business, Energy and Industrial Strategy said it was "another sign the market isn't working" and that it would "shortly set out proposals to help energy consumers".

Ofgem chief executive Dermot Nolan 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 energy prices, is difficult to justify.

"Energy consumers on standard tariffs risk being taken for granted and we encourage customers to shop around to find the best deal for them."

He said the announcement, coming as Ofgem works with the Government on energy market reforms, was "further evidence of the need for change".

EDF has 3.3 million UK energy customers and it pointed out that the majority, who are either on fixed deals or have prepayment meters, will not be affected.

The 7.2% hike in a typical bill to come in June is the result of the supplier putting up gas tariffs by 5.5% and electricity by 9%.

EDF said it had "faced a range of rising costs for some time, in both wholesale and non-wholesale energy costs and obligations" and that it needs to make a "fair" profit margin to be able to invest for the long term.

The announcement comes after Big Six rival SSE (LSE: SSE.L - news) said it was putting up standard bills by 6.9% while E.On set out an 8.8% hike, both from the end of April.

There have also been rises of 9.8% from npower and 8% from ScottishPower, which took effect in March, while British Gas has bucked the trend with a price freeze until August.

Alex Neill, managing director of home products and services at consumer group Which?, said: "Millions are continuing to suffer due to a lack of competition in the energy market."