SSE price increases kick in
From 15 October 2012, 5 million of SSE’s battered customers will be faced with the burden of having to pay an extra £100 a year to heat their homes.
Customers on a Standard tariff paying their bills by monthly direct debit will be hit with an increase of £102 (8.7%) while those paying quarterly by cash or cheque will be stung with a bigger increase of £119 (9.6%).
On the bright side, if there is one, SSE has committed not to increase prices again until at least 1 July 2013. Which is not very long.
SSE has blamed rising costs as the reason for the increase. While we agree that distribution and environmental charges are on the rise, it is not so obvious that wholesale gas and electricity prices are to blame.
According to our data, forward wholesale gas and electricity prices are both lower than they were 12 months ago (7% and 10%) respectively. It is only when you look back over 2 years that you can say wholesale prices have risen (by 30% and 10% respectively) and come into the cost argument. As it happens SSE now tells us that “SSE does this by buying energy in the wholesale market up to two years in advance”. While this may sound a little convenient it does nevertheless at least gives us a benchmark against which to judge their future price changes.
What we think:
For SSE customers there is only one thing to do. Switch to a cheap fixed deal with another provider. You’ll be able to offset all the increase and pick-up an additional saving of £85. That means a total saving of almost £200 compared to the post increase prices. It’s a no brainer.
Wholesale Market Data and Statistics