First British Gas Now SSE Warns Of Gas & Electricity Price Rise
British Gas has already warned that gas and electricity prices will have to rise to keep up with high wholesale energy costs and now a second supplier, Scottish & Southern Energy (SSE) has warned the cost of power is set to rise.
SSE has warned, as British Gas did, that as wholesale gas and electricity prices had risen more than customer bills a price rise was on the cards.
The news comes just as SSE announced a 50% increase in profits while also warning that it may have to increase gas and electricity prices. In addition consumer groups have been angered by the news that SSE is set to pay investors a £700 million dividend for the 12 months to 31 March.
SSE said that pre-tax profits had gone up by 29% but added that its domestic gas business had lost money because of the increase in wholesale gas and electricity prices. While bills had only gone up by 9% in December, wholesale energy prices had risen by 25%. However, since then SSE say wholesale energy prices have risen by as much as 33%.
The head of energy at Consumer Focus, Audrey Gallacher, said “Hard-pressed consumers will be grinding their teeth in frustration as the second of the Big Six hints at price rises while reporting increased profits. Customers simply don’t have faith that they are being asked to pay a fair price and Ofgem has shown this lack of trust has firm foundations”.
The chief executive of SSE, Ian Marchant, said wholesale prices may mean energy bills have to go up. He said “I hope we don’t have to put them up but we may be forced to. We don’t enjoy doing that but you can only defy the market for so long”.
Utility Exchange has reported in the past that Ofgem, the energy regulator, is looking into the behaviour of the “Big Six” energy companies and has urged consumers to compare gas and electricity prices. These are the companies which dominate the energy market and include companies such as E.ON, British Gas and npower. There are concerns that the big energy suppliers are quick to increase gas and electricity prices but slow to lower them when wholesale prices go down.
The news that energy prices are likely to go up again will not only be bad news for householders but businesses too. If domestic prices are due to rise there’s every likelihood that business gas prices and electricity prices will also go up.
The executive director of Which?, Richard Lloyd said “Customers already struggling with rising energy costs and increasing inflation will find today’s announcement difficult to swallow. Once again, it appears that a Big Six energy company is putting its shareholders ahead of its customers. People are fed up with energy companies insisting they have to increase prices, while announcing bumper profits”.
As far as the dividend payments are concerned SSE said it had to reward investors but at the same time it had to save money to fund improvements in power networks and to construct more wind farms.
SSE has not said when there might be an increase in energy prices but a spokesman said the company was watching the market closely.