Scottish Power announces 9% price rise
Scottish Power has become the fourth 'Big Six' energy to unveil a price rise in the last fortnight, with the announcement that gas prices will rise by 8.5% and electricity prices by 9%.
The average increase of 8.6% will hit 2.2 million customers on 6 December 2013, raising their annual dual fuel bill by £113 to £1,424.
The firm said it had been forced to raise prices following increases in "forward wholesale energy costs, increased energy delivery charges and increased costs to support compulsory social and environmental schemes".
Neil Clitheroe, chief executive of 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. 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."
Energy and climate change secretary Edward Davey said: "With fifteen independent energy suppliers to choose from outside the Big Six, it's surprising that these companies think they can keep getting away with bill hikes of this magnitude. As more and more people shop around for the competitive deals on the market, some of which are offered by the independents, companies like Scottish Power can no longer put their bills up in this way with no consequences."
Clare Francis, editor-in-chief of MoneySuperMarket.com, warned that further increases are to be expected: "So far over the last week 20.5 million households have been hit with bill increases from four of the 'Big Six' energy companies and it's only a matter of time before EDF Energy and e.on announce further increases.
Average annual bills will be nearly £1,500 a year once the new prices take effect, adding further pressure to household bills at a time when wages are nowhere near keeping up with inflation.
Francis suggests those looking to switch energy providers could save, on average, £171 by moving to the cheapest fixed tariff. "iSave Fixed v11 from First Utility guarantees to fix your price until May 2015 and, with an average bill of £1,171.97, it is £315 cheaper than the average standard tariff from Scottish Power," she says.
Longer-term fixes are also available from EDF Energy, npower and even Scottish Power, all promising to fix prices until 2017 with average bills now beating standard offerings from British Gas, SSE and Scottish Power.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).