Five million homes face 'shock' energy rise

SSE, the UK’s second biggest energy company after British Gas, said that from mid-October the price of an average annual dual fuel bill will rise from £1,172 to £1,274. Other companies are expected to follow suit

It came as Ofgem, the energy regulator, said the profit margins of profit companies were due to rise by almost 14 per cent.

Consumer groups and MPs said that the “shock” above-inflation rise will condemn cash-strapped families to a “winter of misery”.

The £102 increase will hit 3.3 million dual fuel households, while a further 1.7 million homes will also see sharp rises in their bills.

SSE said that it is “regrettably” raising the cost of gas and electricity by 9 per cent because of the rising cost of energy on the wholesale markets and increasing green taxes from the Government.

However the company’s announcement came as Ofgem, the regulator, said that the annual profit margins of Britain’s energy companies are likely to rise from £35 per customer currently to £40 by the end of November.
MPs accused SSE of profiteering.

“They are simply taking advantage of their customers,” said John Robertson MP, a member of the Energy and Climate Change committee.

Observers speculated that other energy companies could also raise their prices as the autumn approaches.

The price rise is a “hard blow” for consumers, said Audrey Gallacher, director of energy at Consumer Focus.

She said that people will be worried about “a run” of price rises by other energy companies. However there is “little evidence” that all suppliers need to follow suit.

Tom Greatrex, the shadow energy minister, said that hard-pressed families will be “astonished” by the increase.

“Unless ministers get to grips with spiraling energy bills, people will rightly think that this Government is completely out of touch with families and pensioners struggling to make ends meet,” he said.

Mr Robertson said that SSE, which made profits of £1.3 billion last year, was “irresponsible” for putting up its prices.

He said: “The fact is SSE energy barons have irresponsibly hiked its prices yet again, while lining their pockets with inconceivably huge amounts in profits.

“This Tory-led government needs to start putting people before business and do something about it.”

A spokesman for the Department of Energy and Climate Change said that the price hike is “obviously disappointing news for SSE customers”.

However he said that it is up to individual energy companies to explain their prices to their customers.

He said the price rise is “further evidence of the fact that world gas prices are the primary force driving up our energy bills”.

Richard Lloyd, executive director at Which?, called on the Government and Ofcom to reform the “broken” energy market. He said that prices need to be “properly transparent” and tariffs simpler.

Mark Todd, a director at Energyhelpline.com, described SSE’s rise as a “total shock”.

“A nine per cent increase is more than three times the price cut that SSE implemented last winter. Sadly, it seems that the energy market is back to its old ways of tiny price cuts followed by big price hikes.”

22/08/2012 - Telegraph.co.uk

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SSE Electricity And Gas Bills Soar By 9% - Or £102 Per Year

Energy group SSE has said it will increase tariffs by 9% on average in a move impacting around five million electricity customers and 3.4 million gas customers.

SSE, which will introduce the bill hike on 15 October, said it comes in response to energy price increases in wholesale markets, as well as rising costs of using the National Grid network.
The UK's second largest energy firm, formerly known as Scottish & Southern Energy, said it will cap bills following the October price rise until at least the second half of 2013.

SSE said the 9% rise, which applies across gas and electricity, will add another £8.53 a month on to the typical monthly direct debit, dual fuel customer - taking the average annual bill to £1,274.
The group committed in January to keeping household bills on hold until October.

Ian Marchant, SSE chief executive, said: "Unfortunately, the increases in costs that we have seen since making this pledge can no longer be absorbed and mean that we are unable to keep prices at their current levels beyond this autumn.

"An increase in our prices has therefore, regrettably, become unavoidable."
SSE, which trades as Southern Electric, Swalec and Scottish Hydro, said it had seen a 14% increase year-on-year in the average price in the wholesale market to secure gas for the coming winter.

The group also announced changes to simplify bills by introducing a new fixed standard charge of £100 per year per fuel and a single unit rate for energy
used.

It will offer fixed discounts off this price, which will see direct debit customers pay £40 less a year for each fuel, while prompt quarterly bill payers will get a £20 discount per fuel and those choosing paperless billing will get an extra £6 a year per fuel.

The group said it would ensure around 400,000 low-usage customers can remain on a no standard charge tariff if they wish, otherwise they could see their bills rise as a result of the changes.

SSE is the first of the "big six" to raise prices this year, but it is thought others might follow suit soon, with British Gas parent Centrica recently warning wholesale price rises may lead to higher bills this autumn.
Utility groups are also facing increasing costs of regulation and government-sponsored schemes, which are being passed on to customers.

Martin Lewis of MoneySavingExpert.com warned of a further energy price misery to come.

He said: "When one moves others follow, and over the next three months I'd expect to see similar announcements."

He urged customers to consider switching to better deals and said there were some good fixed rate deals on the market.

Richard Lloyd, executive director of Which?, called on the government to reform the energy market ahead of the expected raft of price rises.

He said: "We can't go through another winter with people worrying about their energy bills. The government and the regulator must reform our broken energy market.

"It's time for energy prices to be properly transparent and tariffs to be made simpler, so that consumers get a fair deal."

SSE's price rise comes after it reduced gas prices by 4.5% in March.
It last increased gas prices by 18% and electricity tariffs by 11% last September.

SSE's recent results showed its domestic supply operation made £271.7 million in the year to 31 March, although this was 21% lower than a year earlier.

Consumer Focus said that, following the October price rise, SSE will be by far the most expensive of the big six providers for the typical dual fuel tariff.
Audrey Gallacher, director of energy at Consumer Focus, said: "This price rise will be a hard blow for consumers in the current difficult economic climate.

"People will be worried about a run of price rises, but we see little evidence in the trends in wholesale prices or in the performance of companies that would justify all suppliers following suit."

22/08/2012 - huffingtonpost.co.uk

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Energy bills to soar by more than £300 a year because of obsession with wind power, report claims

Britain's 'obsession' with wind farms will push up family electricity bills by more than £300 a year, a report claimed today.

The Government's green energy plans for the next eight years are a £124billion 'blunder' that will hit every UK household, a senior British economist has also said.
In a stark warning Professor Gordon Hughes, who has produced a study on how wind energy will hit energy costs, said that British consumers simply cannot afford to subsidise wind power.

Prof Hughes is one of the UK's leading energy economists and works at the prestigious University of Edinburgh. He was also a senior adviser on energy and environmental policy at the World Bank.

By 2020 average electricity bills will be around 58 per cent higher - a £320 increase - just because of the flood of wind turbines planned for Britains's coastlines, fields and seas, he said.
Completing the gloomy picture, Professor Hughes believes for all the huge investment in wind farms Britain's greenhouse gas emissions may not even fall.

Wind energy provides almost 2 per cent of global electricity worldwide, a figure expected to approach 10 per cent by 2020, costing Britain an estimated £124 billion.
'The key problems with current policies for wind power are simple,' he said.

'They require a huge commitment of investment to a technology that is not very green, in the sense of saving a lot of CO2, but which is certainly very expensive and inflexible.
'Unless the current Government scales back its commitment to wind power very substantially, its policy will be worse than a mistake, it will be a blunder.
'The average household electricity bill would increase from £528 per year at 2010 prices to a range from £730 to £840 in 2020.'

The report has been published by former Chancellor Lord Lawson's Global Warming Policy Foundation.
Their study has been handed to the House of Commons Energy and Climate Change study for the Economics of Wind Power Committee.

Meanwhile, Professor Ian Fells, who is Professor of Energy Conversion at Newcastle University and an advisor the Commons and Lords, also said that windfarms are too costly.

Instead he claims that combined gas cycle plants could produce the same amount of green energy for £13billion – nearly 10 times cheaper than wind power.
'Wind energy is the most expensive way of generating renewable electricity,' he said.

'It will also cost jobs. We are already seeing some industrial firms packing up and moving abroad. The increasing price of energy is going to be the next big political problem.'
However, the Government was keen today to defend its green energy policies.
'Wind power is a homegrown, secure and sustainable source of energy with an important role as part of a balanced energy mix,' a spokesman said.

'Over-reliance on any one technology could have serious consequences for consumer bills. That’s why we want to see a diverse energy mix with renewables, nuclear, clean coal and gas all playing a part.'

07/08/2012 - dailymail.co.uk

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British Gas profits and bills rise

Profits at British Gas have risen by 23% to £345m as the return of the bleak British weather hiked household energy bills by £90 in the first half of the year.

Centrica, the owner of British Gas, said the £64m increase in operating profit in the six months to the end of June represented a return to normal trading after atypically warm conditions depressed profits last year. Nick Luff, Centrica's finance director, said the improvement in the bottom line had been driven by demand returning to "normal levels" among the group's 15.8 million British Gas customers. The profit increase equated to an increase of £90 on the average household bill over the period, to £614.

British Gas has warned of further increases in bills this year, after warning in May that wholesale gas prices were about 15% higher than last year while non-commodity costs – such as government levies and distribution costs – could add £50 to bills. Taken together, the cost increases could add £100 to bills over the next 18 months.

Sam Laidlaw, Centrica's chief executive, said British Gas still faced cost pressures that analysts say will result in further bill increases this winter. "The cost of gas is still higher for this winter than last winter," he said. British Gas, and its rivals, argue that their hands are tied on the issue of bills. British Gas says its average gas bill is dominated by the wholesale cost of the gas, accounting for 56% of the total, with 5% accounted for by profits. Critics of heating prices, from pensioners' groups to MPs and the industry regulator, argue that British Gas is quick to increase bills when wholesale prices increase but slow to reduce them when they fall.

Richard Hall, head of energy regulation at Consumer Focus, said: "Wholesale prices rose a little earlier in the year but are now falling and they are still a long way from their peak in 2008. We have long questioned whether drops in wholesale costs find their way through to household bills."

The British Gas figures were announced in Centrica's first-half results, which saw a 15% increase in operating profit to £1.45bn. Centrica's two biggest businesses are the "upstream" unit – oil and gas production as well as eight power UK power stations – and the "downstream" operation that provides energy to homes and businesses, where British Gas resides. Aided by three oil and gas field acquisitions in the North Sea for £1.2bn, plus higher wholesale energy prices, the UK upstream business saw operating profits climb by 28% to £682m.

On Wednesday Centrica announced that it is pushing ahead with plans to develop a North Sea gas project with a £1.4bn investment programme that will create 4,000 jobs. The Cygnus project, situated off the coasts of Norfolk and Hartlepool, is a joint venture with the French energy group GDF Suez. The announcement was spurred by the government's decision to award the gas industry a £500m tax break for shallow water gas fields.

Laidlaw added that Centrica's looming decision on whether to invest in British nuclear expansion with France's EdF had not been affected by the outbreak of hostilities between the Treasury and the Department for Energy and Climate

Change over green energy subsidies. The nuclear investment decision by British Energy owners EdF and Centrica is heavily dependent on how much financial support the government provides, through underwriting a minimum price for nuclear-powered energy. Asked about the departmental briefing war, Laidlaw said: "Our perception certainly is that it is not nearly as it has been portrayed in the press." On whether British Energy will push ahead with plans to build two new plants at Hinkley Point in Somerset, Laidlaw said: "There is still a lot of detail to be worked out." He added that EdF and Centrica still hoped to make a final decision on nuclear investment by the year end.

26/07/2012 - guardian.co.uk

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