SSE outlines energy price rises
SSE on Thursday became the first of the big six UK power suppliers to announce gas and electricity price rises ahead of the winter, stoking the political row over living costs. SSE said bills will rise by an average of 8.2 per cent from November 15, affecting 4.4m electricity customers and 2.9m gas customers.
Rising wholesale energy prices, delivery costs and government levies meant its retail operations would be lossmaking to the six months to the end of September, the company said, adding that “85 per cent of a typical energy bill is made up of costs outside our direct control”. Ed Miliband who last month promised last month to freeze energy prices for 20 months if his party wins the 2015 election, tweeted that the price rises “show the need to freeze bills”. The Labour leader said: “We need an energy market which works for ordinary families and businesses,” SSE, which last increased prices in October 2012, said the price rise would equate to about an extra £2 per week for a typical dual fuel customer and promised not to raise prices again before autumn 2014. Will Morris, group managing director for retail operations, partly blamed the government for the price rise and said he was “sorry we have to do this”. “Politicians could protect customers by transferring the costs arising from the environmental and social policies pursued by all main parties in government from the energy bill payer to the taxpayer,” he said in a statement. “This would immediately take up to £4bn off UK energy bills and £8bn a year by 2020 – cutting a typical dual fuel bill by around £110 this year alone and redistributing the costs to those more able to afford it. “We’ve done as much as we could to keep prices down, but the reality is that buying wholesale energy in global markets, delivering it to customers’ homes, and government-imposed levies collected through bills – endorsed by all the major parties – all cost more than they did last year,” said Mr Morris. He urged customers to improve their energy efficiency and said there was financial support for customers who needed it. Ofgem fined SSE in April £10.5m for “prolonged and extensive” mis-selling of its power contracts, The regulator found that sales staff had used misleading scripts to encourage people to switch their accounts to the company. Michael Fallon, energy minister, told Sky News he was disappointed with the announcement and urged customers to examine whether they could switch to a cheaper tariff. SSE said it believed it was “fair” for the annual profit in its energy supply business to average about 5 per cent over three to five years – arguing that major food retailers made similar margins. It said that the profit was 4.2 per cent in 2012-13 and would be less than 5 per cent in 2013-14. The impact of Mr Miliband’s pledge on the London-listed energy groups was dramatic. SSE and fellow utility Centrica lost a combined £2.7bn in market value in two days after the announcement.