Cold winter ahead? SSE pushes energy prices up 8%

Just a fortnight after Ed Miliband's speech, this is deeply unfortunate timing from the energy company.

by Emma Haslett
Last Updated: 30 Oct 2013

A lesson in how to make yourself extremely unpopular among your customers this morning from energy firm SSE, which admitted, amid much shuffling of feet and kicking of dirt, that it wants to raise prices. By 8.2%. Ouch.

'We're sorry we have to do this,' mumbled SSE's Will Morris, presumably while staring hard at his shoes. 

'We've done as much as we could to keep prices down, but the reality is that buying wholesale energy in global markets, delivering it to customers' homes, and government-imposed levies collected through bills - endorsed by all the major parties - all cost more than they did last year.'

Apparently wholesale costs have risen 4%, the cost of delivering to people's homes has gone up 10% and government levies are up 13%. The company's profit margin, which was 4.2% last year, is expected to miss its 5% target again this year.

The price rise pushes the average bill for a duel-fuel customer up to £1,224. Implemented on November 15, it's expected to hit about 4.4 million electricity customers and about 2.9 million gas customers. It's by no means the biggest rise in recent memory, mind - between October and December last year, all 'big six' energy companies introduced price rises of between 6% and 10.8%.  

But MT probably doesn't need to point out that, coming two weeks after Ed 'the people's friend' Miliband gave his big conference speech vowing to freeze energy prices for several years if Labour is voted in at the next election, this doesn't look good. 

Admittedly, all the energy companies immediately threatened to leave Britain if any such legislation were introduced. But given the fact that government levies are being blamed for the price rise, we're sure Messrs Miliband, Balls et al will have something to say about this.

It does demonstrate the difficulties of being beholden to the wholesale gas market. Morris took the opportunity to highlight the fact that government spending on energy infrastructure is woeful (to the point that companies have warned of 'blackouts' over the winter). 

'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.

'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 consumers through energy bills.' 

When energy bills are this high, it's hard to feel sorry for these guys. But blaming it all on them is also a fallacy. As Elvis might have said to the government, were he chief executive of a major British energy firm circa 2013: 'a little less conversation, a little more action, please'.

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