npower first to hike energy bills

By Jennifer Hill, Personal Finance Correspondent

LONDON (Reuters) - Millions of consumers are to be hit with higher energy bills after npower became the first utility provider to hike its standard tariffs.

The company said its domestic customers would have to pay an average increase of 17.2 percent for gas and 12.7 percent for electricity from Saturday.

That will add an average 95 pounds for gas and 64 pounds for electricity to annual bills.

It is expected to be the first in a string of retail price increases across the industry, blamed on the rising cost of wholesale energy and other cost pressures, such as growing distribution and transmission costs.

Giuseppe Di Vita, managing director of npower's residential business, said the decision was not an easy one.

"We always try to protect our customers for as long as possible, but sadly higher energy prices are a fact of life.

"npower is not alone in facing these higher costs, and we expect other suppliers to follow suit very shortly."

Wholesale electricity costs have risen by 66 percent and gas by 60 percent since mid-February last year, and signs started growing in late 2007 that consumers would be hit with mounting energy bills come 2008.