Energy price rise misery hits consumers again
ScottishPower has announced that it is putting its gas and electricity prices up for the second time in 9 months. The increase of 19% or £124 for gas and 10% or £56 for electricity comes into effect from 1st August and will hit around 2.4 million households. It will add an extra £180 on to ScottishPower's average annual standard dual fuel bill, which will increase from £1,211 to £1,391 as a result.
It is the first of the big six suppliers to announce a second general price hike and sends out a clear warning that household energy bills are on the rise again. The first round of hikes only ended this March - suppliers increased their prices by an average of 5.6% or £35 for gas and 6.4% or £28 for electricity, hitting almost 28 million customers and adding an incredible £630 million onto household energy bills. As a result the average household energy bill hit £1,131 a year.
The move comes only months after Ofgem announced that it had found evidence of energy prices tending to rise in response to wholesale cost increases faster than they fall with decreases. Suppliers also still have the threat of a Competition Commission referral hanging over them.
Further price rises were predicted for later this year following the disaster in Japan and the crisis in Libya, which resulted in an increase in wholesale costs. Unfortunately, ScottishPower's move today could be followed by other suppliers, resulting in households seeing price hikes far sooner than expected.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "We are in real danger of seeing a repeat of 2008 when energy bills rocketed by £334 or 41% as a result of consecutive rounds of price hikes. Suppliers may think this is justified because of the increase in wholesale costs, but Ofgem will need to consider whether these increases are justified or not and act swiftly to protect consumers. Given that Ofgem has found some evidence that suppliers increase their prices more quickly than they drop them, any consumer complaints about price hikes are unlikely to fall on deaf ears.
"The average annual household energy bill from 1st August will now be £1,162, £9 more than when prices were at a peak in January 2009. The spectre of people being priced out of the energy market is raising its ugly head again. 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 £459 - this is a substantial saving and could make a real difference for those who are worried or struggling with bills."