ScottishPower bills will soar 8% for 1m families
SCOTTISHPOWER became the latest firm to punish customers yesterday with an inflation-busting rise in energy tariffs.
The 7.8 per cent increase in gas and electricity will add £86 to a dual fuel bill for some 1.1 million households across the country.
Millions more struggling families and pensioners could also feel the pinch as other energy firms prepare to raise prices.
Bosses at two other members of the Big Six group of energy firms, SSE and German-owned E.ON, will be eyeing increases.
British Gas, the UK’s biggest supplier, which trades north of the Border as Scottish Gas, yesterday ruled out any rise until August – but is expected to push up tariffs ahead of next winter.
The increases come despite criticism from energy watchdog Ofgem and an indication from Theresa May at Prime Minister’s Question Time this week that tackling rip-off energy bills is one of her top priorities.
However, her concerns and similar comments from her predecessor, David Cameron, and successive energy secretaries appear to have been ignored by the energy firms.
Last week, German-owned Npower said bills will rise by 9.8 per cent, adding £109 to annual bills for those on a standard variable tariff.
EDF, which is owned by the French, has announced a 10.7 per cent increase on electricity from March. This will be partially offset by a 5.2 per cent cut for gas.
ScottishPower said the increase reflects higher wholesale prices, the cost of compulsory environmental schemes such as supporting green energy and funding double glazing for the poor, plus the bill for installing smart meters in homes.
It said the £86 increase on a dual fuel bill is made up of £54 to reflect higher energy costs, £18 for compulsory environmental schemes and £10 for smart meters. Around £4 of the increase is VAT.
The increases apply to those households which are on an expensive standard variable tariffs (SVT).
Last year, an inquiry by the Competition & Markets Authority (CMA) found consumers on SVTs are being collectively overcharged by £1.4billion a year because of a failure of competition in the energy market.
People can save themselves more than £300 a year by moving to a fixed rate deal and paying by direct debit. Despite this, millions have failed to make a switch, apparently because they do not trust suppliers.
Only this week, the boss of Ofgem, Dermot Nolan, said large prices were not justified. He also urged customers to switch away from firms imposing big increases.
Claire Osborne, of uSwitch.com, said: ‘It’s incredibly disappointing but not entirely surprising to see another Big Six energy supplier punish their most loyal customers with an inflation-busting price rise.
‘With one in three working families already struggling to pay their energy bills, and the cost of living set to rise across the board, the news could not be more unwelcome.
‘Along with other suppliers, ScottishPower has blamed wholesale price increases and the cost of the smart meter rollout. But this rings hollow when you consider its bills weren’t so quick to fall when wholesale prices were low.’
Energy expert at MoneySuperMarket, Stephen Murray, said: ‘It’s clearly open season for energy price movements.’
He added that anyone on an SVT tariff, including those with British Gas, are paying too much and should be switching.
He said: ‘The British Gas price freeze for its six million customers still means that, based on current prices, they are overpaying by around £170 on their energy.’
ScottishPower said it is making efforts to encourage customers to switch from its expensive SVT to cheaper fixed rate deals.
UK retail director Colin McNeill said: ‘This price change follows months of cost increases that have already led to significant rises in fixed price products that now have to be reflected in standard prices.’
Centrica, which owns British Gas, said it had decided to freeze prices until August ‘despite increases in external costs’.
Boss Mark Hodges added: ‘We are pleased to give our customers on standard tariffs the peace of mind that the price they’re paying will remain unchanged until August.’
Ofgem said: ‘Our recent analysis did not show a case for significant price increases for standard variable tariffs where suppliers have bought energy well in advance.
‘However, there may be particular factors affecting individual suppliers. If this is the case, they need to justify to their customers why prices are going up, or risk losing customers as a result.’
‘Open season for price movements’