Energy price rise misery begins
Britain's second largest energy supplier, SSE (Scottish and Southern Energy), has announced that it is putting its gas prices up by 9.4% or £67 from 1st December. The increase will hit its standard tariffs, affecting 3.6 million customers. It will add an extra £67 on to the average annual SSE standard dual fuel bill, which will increase from £1,159 to £1,226 as a result.
It is the first of the big six suppliers to announce a general price increase since 2008 and sends out a clear warning that household energy bills are on the rise again. In 2008, household energy prices rocketed by an eye watering 42% or £381. Price cuts in 2009 and in 2010 averaged out at 8% or £99 in total, leaving the average household energy bill £283 or 31% higher than in January 2008.
The move comes less than a month after EDF Energy increased electricity prices for 1.2 million customers blaming distribution costs and realignment to Ofgem's cost reflectivity rules. Ofgem's recent Quarterly Market Report forecast a squeeze on suppliers' net margins by spring 2011. This was expected to herald a widespread increase in household energy prices. Unfortunately, SSE's move today could be followed by other suppliers, resulting in households seeing price hikes far sooner than expected and feeling the pain of the increases during the winter when energy consumption is at its peak.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "With winter about to kick-in this is a body blow for consumers. What nobody wants to see is a repeat of 2008 when suppliers last put prices up and bills rocketed by £381 or 42% as a result. From the 1st December, the average household energy bill will be over £1,200. For many, bills are already in the realms of the unaffordable - any increases will simply see more people forced to think long and hard about whether to heat their home or cook a meal - this is unacceptable.
"Ofgem's recent report into wholesale prices suggested that a price hike could be imminent in spring. This would at least have bought households some time and would have seen any increases hitting bills after the winter. Now, if other suppliers follow SSE's lead, consumers will see these increases on their heavy winter bills making it a real double whammy.
"There is no room for complacency and I would urge consumers to act now. There are two key steps to keeping a lid on your energy bills - use less energy by making your home more energy efficient and move to a competitive energy plan so that you pay less for the energy you do use. The difference between the cheapest energy plan in the market and the most expensive is £422 - this is a substantial saving and could make a real difference for those who are worried or struggling with bills."