SSE has joined its “big six” rivals in announcing that it will increase domestic electricity and gas costs.
This summertime price hike, which comes into effect in July, will result in a 6.7% average increase in billing for its 2.36 million customers.
These customers of SSE Energy Services, which also supplies M&S Energy, will see this increase amount to an added £76 on top of their current bills. With the typical dual fuel customer expecting to see a rise of around £1.50 each week, consumers are beginning to vote with their feet.
SSE says the price hike is a “response to increasing costs”.
Their website states that the costs results from “higher wholesale energy prices”, claiming that government policies that are “designed to modernise and decarbonise Britain’s energy system” but push costs up “must eventually be reflected in prices”.
Stephen Forbes, CCO at SSE, announced that the company“worked hard to withstand the increasing costs”.
GOVERNMENT LEGISLATION BLAMED FOR “INCREASING COSTS”
In part, these price increases reflect new government legislation to cap poor value energy tariffs in time for next winter.
The “Domestic Gas and Electricity (Tariff Cap) Bill” was introduced in late February 2018.Theresa May insisted the bill would “force energy companies to change their ways”, noting that “our energy price cap will cut bills for millions of families.”
“It’s often older people or those on low incomes who are stuck on rip-off energy tariffs,” she said.
The Gov.UK website claims that at the moment, some consumers are paying up to £300 more than is necessary, and that the cap will “bring overcharging under control.”
However, Stephen Forbes argues that “as we’ve seen with recent adjustments to Ofgem’s price caps, the cost of supplying energy is increasing and this ultimately impacts the prices we’re able to offer customers.”
Rachel Morison and Matthew Carr at Bloomberg wrote in December 2017 that for utilities providers that have their own power plants, such as Centrica, SSE Plc and Drax Plc, these price increases are “an opportunity to market at a higher price the portion of their output that’s not already sold in advance.”
They write that the post-Brexit UK gas market is “even more vulnerable to price spikes this winter”.
Whilst suggesting that SSE and other members of the “big six” are capitalising upon price increases, against Theresa May’s aims, Morison and Carr emphasise that Brexit is to blame for the increasing bills.
Their headline noted that UK consumers were only protected from spikes “for now”. It seems that SSE’s latest announcement calls the end of this lull.
