SSE announces 9% energy price rise
Typical dual-fuel customers £100 a year worse off after gas and electricity provider turns up the heat
SSE has shocked consumers by announcing a 9% increase in both gas and electricity prices from 15 October, resulting in “misery” for millions of households.
The price rise, affecting 5 million electricity customers and 3.4 million gas customers, means SSE’s average standard dual-fuel bill will increase by more than £100 a year from £1,172 to £1,274.
The supplier had previously promised not to increase prices before October, so is in effect increasing household energy bills at the first possible opportunity. It blamed “sustained increases” in the cost of using the electricity and gas networks, as well as the price it has paid for energy in the wholesale markets.
When the higher prices kick in customers will also be moved to a standing charge and single unit rate, meaning millions will have to pay the standing charge of £100 a year for each type of fuel they use, equating to around 55p a day for dual fuel users. Customers paying by direct debit will get a £40 discount.
The firm said it will cap gas and electricity prices until at least the second half of 2013, adding that “a sustained fall in wholesale energy costs would allow household prices to be reduced”.
Ian Marchant, SSE chief executive, said: “In a time of economic difficulty we have endeavoured to keep energy bills as low as possible. 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.”
But the move has angered consumer groups. Ann Robinson, director of consumer policy at uSwitch.com, described the increase as “a serious blow for cash-strapped consumers”.
“Last winter, more than eight in 10 households (83%) rationed their energy use because of cost – a round of price hikes this winter will condemn many more to this misery too,” she said.
In 2011, all the big six energy suppliers increased their prices, in some cases more than once. SSE increased its prices in December 2010 and September 2011 by 21.9% or £227 in total. It cut them in March this year by 2.4% or £30.
Although E.ON has said it will not increase bills for customers before the end of 2012, fears are growing that SSE’s action will pave the way for other suppliers to increase their prices. Scott Byrom, energy expert at Moneysupermarket.com, said: “I expect a domino effect in the market as the other members of the big six providers follow suit to hike prices.”
The news of the price rise came as Santander announced an increase in its mortgage standard variable rate from 3 October.