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Scottish and Southern Energy hikes prices 9%

The Big Six energy supplier says significantly increased costs mean the rise in its gas and electricity prices is 'unavoidable'.

 
Scottish and Southern Energy hikes prices 9%

Scottish and Southern Energy today announced plans to increase both its gas and electricity prices by 9% from 15 October.

The price rise, which will affect some 9 million customers, will see the price of SSE’s average standard dual-fuel bill increase from £1,172 to £1,274 – a rise of more than £100.

Price increase 'unavoidable'

The Big Six supplier, which had previously promised not to increase its prices before October, said the price rise was 'unavoidable' owing to significantly increased costs.

Wholesale prices are around 14% higher than last winter, the energy supplier said. The cost of distributing energy to customers’ home – which is determined by Ofgem – is also up 9% since last year, while mandatory environmental and social initiative costs are up some 30%.

SSE added, however, that following this rise prices will be capped until at least the second half of 2013. And should there be a sustained fall in wholesale energy costs, household bills could come back down.

Ian Merchant, SSE’s chief executive, said: ‘In a time of economic difficulty we have endeavoured to keep energy bills as low as possible. That is why we pledged last summer to cap our energy prices for as long as possible and until at least August 2012, and then in January extended this pledge to October 2012.

‘Unfortunately, the increases in costs that we have seen since making this pledge can no longer be absorbed and mean that we are unable to keep prices at their current levels beyond this autumn. An increase in our prices has therefore, regrettably, become unavoidable,’ he added.

Audrey Gallacher, of Consumer Focus, meanwhile, said: 'People will be worried about a run of price rises, but we see little evidence in the trends in wholesale prices or in the performance of companies, that would justify all suppliers following suit'.

'It is vital that the regulator continues to scrutinise the market to make sure consumers are paying a fair price and profits are at acceptable levels,' Gallacher added.

A change in billing structure

The energy company is also introducing a new ‘simple fixed standing charge’ of £100 per fuel per year to cover administration costs and a single unit rate for energy usage.

This pricing structure replaces the more confusing two tier tariff which saw customers charged a higher rate for each unit of energy used initially – to take into account admin costs such as billing for example – and a lower price thereafter.

SSE said the vast majority of customers should be better off or see very little difference in their bill as a result of the change, while the 60% of SSE customers which pay their bills by direct debit will benefit from a £40 per fuel discount on the standing charge.

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8 comments so far. Why not have your say?

JEL G

Aug 22, 2012 at 19:02

As long as they keep increasing their dividend l can accept the price hike.

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Rob Walker

Aug 22, 2012 at 19:46

What a load of waffle. Ever since the Thatcher government 'privatised' energy companies we have had to listen to the competing PR and Advertising of these contrived organisations trying to justify their existence on this earth as they all 'compete' to sell the same product which comes out of the ground at the same cost. The cost of this competition is obscene. It's all because governments can't manage quangos (ie the Gas Board et al) to deliver our own natural resources at the lowest cost. 30+ years after the event it still looks rediculous. Fancy working for Scottish and Southern energy and saying 'After 40 years of selling something to the public that was theirs anyway I can now retire from this pointless activity having added no value to mankind'.

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terence radley

Aug 22, 2012 at 20:29

Agreed Rob,but you can do nothing about it.

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Rob Morrison

Aug 22, 2012 at 21:21

Energy suppliers have a licence to print money, at the consumer's expense. This is also made much worse by the hugely over priced returns to those installing solar panels for their energy.

The 25 yr commitment made to solar energy is unsustainable.

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john_r

Aug 23, 2012 at 00:32

I can assure you energy prices would be considerably higher under the old inefficient nationalised structure. One thing privatisation did bring us is competiton, higher efficiency and lower prices. UK went from being one of the highest priced suppliers in Europe to one of the lowest in a few years.

And anyone thinking that SSE prints money might be interested to know SSEmade less than 1% profit last year (profit before tax). Not even Woolworths could survive on that.

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Alan Tonks

Aug 23, 2012 at 13:13

I can assure you john_r that what you have written, is the biggest load of rubbish that I have read on here for a long time.

All the energy companies are in it together, the regulator is on the side of the energy companies and not the consumer. So where is the competition?

You can certainly say that SSE doesn’t print money, because it fleeces the consumer of its money. I was wondering where on earth your fantasy figures came from.

Well all of your information must be really good, if you think Woolworths is still in business.

Now because your information is obviously first rate, let me guess you work for SSE.

I have called energy companies leeches in the past, but they only suck blood, Pirahanas would fit much better.

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john_r

Aug 25, 2012 at 03:29

Alan,

For your information I have always worked in the private sector but I admit prior to UK privatisation I was occasionally gobsmacked at how the nationalised industries managed to drag down the country's finances. The workers were not at fault it's just that nationalised industries are not unfortunately competitive. Knowing that they had no competition they could and did add an extra 1p per KW of power ( on a regular basis) to cover their inefficiency. So much so that in the early 1990's it became uneconomic for private industry to compete with the rest of the world on energy consuming business.

After privatisation we have have definitely clawed our way back.

I mentioned Woolworths only becaused it failed on inadequate margins (profits needed to survive) - Surely you don't want SSE to follow suit. As for the facts and figures on SSE that I previously quoted you can check these out on 'Digitallook' website ( I assure you I dont work for them either).

All I am saying is that the performance of the old nationalised industries (electricity , gas, telecom) is not history to be remembered but better to be forgotten. For the next ten years it's going to be very tough whoever is in goverment.

Don't dwell on the past - let's work to improve the future.

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terence radley

Aug 25, 2012 at 13:08

Bull shit ! The gas price goes down,it takes ages before a slight reduction occurs - gas wholesale prices rise,hey presto up go the cost+extra,straight away.

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