Customers of SSE are set to see their electricity bills rise by 14.9% from 28 April, as the company became the latest of the “big six” energy suppliers to increase prices.
The firm, formerly known as Scottish & Southern Energy, said its typical dual fuel (gas and electricity) customer will see their annual bill rise by 6.9%, or £73 a year. It blamed its first electricity price rise in three-and-a-half years on government policies that require all energy customers to subsidise renewable energy, and the cost of a smart meter installation programme. Gas prices for the company’s 2.8 million customers remain unchanged.
Will Morris, SSE’s managing director for retail, said he “deeply regretted” having to put prices up. “We have seen significant increases in electricity costs, which are outside our control,” he said. “Without an increase we would have been supplying electricity to domestic customers at a loss.”
Four of the other big six suppliers have already announced price rises this year, while British Gas has held its prices until August. Scottish Power’s standard electricity prices will increase by an average of 10.8% and gas by 4.7% on 31 March. Npower is raising its standard tariff electricity prices by 15% from 16 March, and gas prices by 4.8%. EDF Energy cut its gas prices by 5.2% in January, but its electricity prices rose by 8.4% on 1 March. E.ON is increasing electricity prices by an average of 13.8% and gas prices by 3.8% on 26 April.
Mark Todd of switching service energyhelpline described the SSE increase as a hammer blow to households. “SSE lost 130,000 customers last year, and are likely to lose even more as customers switch to beat the hikes. The company announced in February that gas usage was up by 10% and electricity usage was up by 2% in 2016, meaning they benefited from higher usage last year and will now benefit from higher prices in 2017. Customers must not continue to stay loyal to the energy giants. Move to a low-cost fixed-rate tariff and you can beat these price rises.”
Todd says a typical SSE standard tariff customer will pay £1,141 a year after this price rise, yet could get a deal as cheap as £834 a year by switching.
A two-year investigation by the Competition and Markets Authority concluded last June that 70% of domestic customers of the big six were on expensive standard variable tariffs and could save more than £300 by switching. As a result, customers have been paying £1.4bn a year more than they would in a fully competitive market, the CMA found.
The government is expected to address concerns about the energy market when it publishes a consumer green paper in the spring. John Penrose, a former minister at the Cabinet Office and a Conservative MP, has called on the government to introduce a relative price cap, where the worst-value standard variable tariffs are no more than a certain percentage more expensive than the best-value fixed deals. He said: “We still get lots of competition, lots of choice, but it does mean the most vulnerable of us or those of us with least time to switch suppliers don’t get ripped off.”
Penrose secured a House of Commons debate this week on energy bills. “In most things in life, if you are a loyal customer you are valued and rewarded. But apparently for your energy bill, loyal customers in the view of big energy firms are there to be exploited and not rewarded – and that doesn’t seem fair,” he said.