Scottish Power is to increase its domestic gas and electricity prices from 6 December 2013 ‘to recover rising costs’.
It is the latest of Britain’s ‘Big Six’ power companies – which dominate the gas and electricity markets – to raise prices by more than three times the current rate of inflation.
Gas prices will rise by an average 8.5% and electricity by 9% – adding 8.6% (£113) to the average annual bills of dual fuel customers.
The Glasgow-based company, which is part of Spain’s Iberdrola utility group, supplies power to central and southern Scotland, Merseyside and North Wales and owns and operates and number of coal-fired power stations across the UK.
The company blamed rises in forward wholesale energy costs, increased energy delivery charges and increased costs to support compulsory social and environmental schemes for its decision, citing in particular the following three main factors:
* 7% increase in the costs of the gas and electricity purchased on wholesale markets
* 11% increase in the costs of delivering gas and electricity to our customers’ homes
* 16% increase in the costs of compulsory environmental and social schemes
These costs have had a significant financial impact as shown in the group’s financial results for the first nine months of 2013, announced earlier this week, which reported an operating loss of £23 million for Scottish Power’s combined Retail and Generation activities in the UK. At the same time, Scottish Power has more than doubled its annual investment programme from £600million in 2006 to £1.3billion this year.
In an indication of widespread political and consumer concerns about ever-rising energy prices, the company highlighted that it ‘continues to be a strong payer of taxes with £2billion paid since 2007.’
Neil Clitheroe, Chief Executive of Scottish Power Energy Retail and Generation, said: “The cost of purchasing and delivering energy to homes across Britain has risen significantly this year. With an increase in costs for delivering compulsory schemes to reduce carbon emissions and improving energy efficiency in homes, we unfortunately have no other option than to pass these on by increasing our prices for customers.
“We understand that these are difficult times for many families, and we have done what we can to hold our prices for as long as possible. Recently we announced a range of measures to help our most vulnerable customers this winter. We will now write to every customer who will be impacted by the price increase, and we would encourage anyone who is concerned to contact us so we can discuss their options.”
Meanwhile, Scottish Power is simplifying its pricing structure and reducing the number of different tariffs it offers in line with Ofgem’s Retail Market Review reforms. “No Standing Charge” standard prices will be moved to “Standing Charge” standard prices and discounts will be simplified with the prompt payment discount removed
From next year, social tariffs will no longer be supported by the Government’s Warm Home Discount scheme. Scottish Power is the last of the major energy companies to remove this type of tariff.