Power shock for Big Six as SSE breaks ranks with plan to abolish controversial default tariff

Perth-based utility SSE –  one of Britain’s Big Six energy providers – has become the first of the pack to buckle under growing consumer and political pressure against high and rising gas and electricity prices.

In a clear break from the ranks of the remaining Big Five, SSE has announced it will halt its process of dumping customers on to its high standard variable tariff with effect from April 2018.

Against a backdrop of widespread consumer mistrust of the Big Six over prices that rise like rockets, but fall like leaves and a negligent corporate culture that penalises loyal customers by ramping them up on standard variable tariffs unless they actively switch to rival independents, the Brit-Govt. is also drafting a new statutory price-cap to impose on prices.

The Competition Authority (CMA) last year found that consumers are over-paying a total of £1.4 billion a year for energy prices than they should in a ‘truly competitive market’.

And last week, the Business & Energy Minister Greg Clark berated the Big Six in particular for abusing the trust of millions of their customers where loyal and long-standing gas and electricity consumers were ‘punished for their loyalty’ by not regularly switching to alternative independent providers.

The market-dominant Big Six providers (who command around 85% of the British energy supply market) also face existential reform in the Helm Review of the Cost of Energy, which wants far greater competition and clarity in the retail energy markets.

 Under mounting pressure, last night, SSE rushed to declare that it would no longer dump customers on to its standard variable tariff when they come to the end of any fixed-term (lower price) contract.

Alistair Phillips-Davies, SSE Chief Executive, explained: “In a significant break with current industry wide practice, from the early part of next financial year SSE will no longer automatically roll customers onto SVTs once they have come to the end of their fixed term contracts.

“Instead, SSE intends to move customers onto an equivalent or cheaper fixed-term tariff, which would fix prices for 12 months with no exit fees. This will ensure customers have security over the price they pay for their energy, while also leaving them free and able to shop around in the competitive market.

“Looking further ahead, we are currently exploring the possibility of no longer selling SVTs at all – unless a customer specifically requests it (though this would be subject to further discussion with OFGEM).  

“We are committed to maintaining the direction of travel away from SVTs – which have clearly become unpopular – and want to be part of the solution, not the problem, in the energy supply market.

“We anticipate that these changes, along with continued efforts to engage customers with proactive communications, will accelerate the reduction in the number of SSE customers on SVTs.”

7 Nov 2017

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