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SSE raises energy prices by 8.2% – adding £104 to average annual bill Ed Miliband condemns 'rip-off' energy firms after SSE 8% price rise
(about 9 hours later)
More than 7m households face added financial pressure this winter after one of Britain's biggest energy companies said it would raise prices by 8.2%. The row over soaring fuel bills escalated on Thursday when Ed Miliband accused SSE, one of the country's big six energy providers, of "ripping off" 7 million customers with an 8.2% price increase.
Customers of SSE will see annual dual fuel bills rise by around £104 to £1,380 after the higher charges are imposed from 15 November. SSE, which earlier this week promised above-inflation dividend payouts to its shareholders, admitted that raising gas and electricity hikes over £100 to an average of £1,465 per annum would lead to more fuel poverty. But it blamed government policies for the price rise, which will take effect on 15 November.
The company said it would not raise prices again before autumn 2014 at the earliest and advised customers worried about the hike to get in touch to discuss possible help available to them. Amid expectations that other big energy firms are poised to follow suit, Miliband attacked David Cameron for letting power companies "get away with it" and letting down the British people.
The decision to increase prices intensified the battle between UK energy companies and ministers over prices hikes, and SSE said governments past and present must take their share of the blame for increases. "The companies are putting up prices because we've got a broken energy market and they are ripping off consumers," he said. "This latest scandal shows why the government needs to act. The companies are trying to blame everyone else, the government is trying to blame everyone else … They're responsible, they're not getting a grip. We would get a grip: we'd freeze prices, we'd reform a broken energy market."
The debate has intensified since Ed Miliband infuriated energy companies by announcing he would freeze energy prices for 20 months if Labour wins the election in 2015. Cameron responded by saying the proposal to freeze energy prices, first unveiled by Miliband at the Labour conference two weeks ago, was a "con" because the increases were driven by international pressures and a moratorium would not help.
"We know we will come in for a great deal of criticism for this decision and politicians will no doubt be lining up to condemn us. But over many years policymakers themselves have failed to highlight adequately the cost to consumers of the policies they have pursued in government," said Will Morris, group managing director of SSE's retail business. The prime minister said the best way of reducing energy bills was to tackle the roots causes of high wholesale gas prices, including improving competition between energy companies and pushing ahead with shale fracking. Cameron said green levies to subsidise renewables would not be on bills "for a moment longer than is necessary" but added that the UK needs to have a "balanced energy mix" including nuclear power and wind power. To achieve this, "some of those subsidies have been necessary", he said.
"They can't expect to have power stations replaced with new technologies, the network to be upgraded and nationwide energy efficiency schemes all to be funded for free. And as an energy provider we are in the unenviable position of having to pass this cost on to customers through energy bills." Consumer groups warned that other big six companies would be poised to push through their own increases shortly, while the energy regulator, Ofgem, promised to start a consultation on how to improve the transparency of company profits.
SSE blamed a 13% rise in government-imposed levies on energy bills for the changes to its household energy tariffs, as well as the costs of upgrading electricity and gas networks and a rise in wholesale prices. Richard Lloyd, executive director of consumer campaign group Which?, described the move as a "massive blow" to SSE customers at a time when rising energy prices are consistently one of the top worries for hard-pressed consumers.
Challenging Westminster, Morris said that "if politicians want to do something to make bills cheaper and fairer", they should take the cost of government policies out of bills and fund them through general taxation instead. He called on the government to intervene in the energy market to "make sure everything possible is done to keep prices in check", such as breaking up the biggest energy companies into separate power generation and supply businesses.
He said that would take around £110 off household bills "immediately". Mark Todd, a director at the price comparison service energyhelpline, said: "The dam has burst: expect a flood of price rises to follow. Other major suppliers are very likely to follow suit in a matter of days. It will be a bitter pill to swallow for customers, who have been hit by 40% price rises now in the last four years."
Michael Fallon, energy minister, said the price rise announced by SSE was "disappointing" and urged people to look around for better deals. "[There is] not enough switch at the moment. The real answer is compeition, I'd like to see more competition in this market," he told Sky News. SSE, which was fined a record £10.5m by Ofgem earlier this year for "prolonged and extensive" mis-selling, insisted that a 13% rise in government levies plus the costs of upgrading electricity and gas networks, along with a rise in wholesale prices, were responsible for pushing up its bills. Will Morris, managing director of SSE's retail business, said that "if politicians want to do something to make bills cheaper and fairer, they should take the cost of government policies out of bills and fund them through general taxation instead".
Gillian Guy, chief executive of Citizens Advice, appealed to other energy companies to refrain from raising their prices to avoid pushing more people into poverty. The company has promised not to increase its bills again until 2014 but while saying "sorry" to customers, its website still talks of "our dividend obsession", and adds: "we have just one strategic priority: sustained real dividend growth." Earlier this week its finance director, Gregor Alexander, insisted the company would stick to above-inflation dividend rises, while in a question and answer section on its website SSE admits "in all likelihood and unfortunately" the latest tariff increases will result in more fuel poverty.
This brought a stinging attack from the campaign group Fuel Poverty Action. "We don't believe that SSE is apologetic about the price rises; they reported £1.4bn pre-tax profits this spring, and five of their top executives are earning over £1m a year. The big six continue to put their own profits before the lives of millions of people in the UK currently making the impossible choice between heating and eating," said the organisation's Clare Welton.
Meanwhile, the National Debtline service said it had received a record 15,502 calls from people seeking help with energy debts in the first six months of this year, up 10% on the same period of 2012.
Britain has been affected by a series of changes that have driven up prices, including the running-down of North Sea gas supplies, rising international demand for gas following the Fukushima shutdowns, and a government drive to reduce carbon emissions by subsidising the building of wind farms and solar arrays.
But the six dominant energy companies have made themselves deeply unpopular with numerous scandals involving mis-selling, high executive bonuses and low corporation tax payments. Critics believe they hold a gun to the head of government by warning the lights will go out unless they make substantial profits; but they repeatedly argue that their retail margins are relatively low, at around 5%.
Gillian Guy, the chief executive of Citizens Advice, appealed to other firms to refrain from raising their prices to avoid pushing more people into poverty.
"This price rise will be a blow for stretched budgets. The hike comes at a time when some working households are turning to food banks to feed their families as they struggle to cope with the rising cost of living. I hope other energy firms show an understanding of their customers' financial situation by not raising their prices this winter.""This price rise will be a blow for stretched budgets. The hike comes at a time when some working households are turning to food banks to feed their families as they struggle to cope with the rising cost of living. I hope other energy firms show an understanding of their customers' financial situation by not raising their prices this winter."
Ann Robinson, director of consumer policy at uSwitch.com, described the price rise as "a crippling blow for consumers".
"The danger now is that the other big six suppliers will follow suit. This raises the spectre of yet more households forced to cut back on their heating. Last winter almost seven-in-10 households went without heating at some point to keep their energy costs down, while over a third said that cutting back on energy usage was affecting their quality of life or health. This is the grim reality we face as the cost of energy spirals ever higher."
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