It said the tariff hike, which kicks in on 15 November, was necessary because of increased costs. Wholesale energy costs have gone up by 4 per cent, network charges by 10 per cent and levies on bills to pay for government policies by 13 per cent since its last price rise a year ago, the company said.
The energy supplier called on government to protect customers by paying for environmental and social policies through taxation, instead of bills. That would cut a typical dual fuel bill by £110 this year and redistribute costs “to those more able to afford it”, it claimed.
Will Morris, group managing director of retail, said: “Over many years policymakers themselves have failed to highlight adequately the cost to consumers of the policies they have pursued in government. They can’t expect to have power stations replaced with new technologies, the network to be upgraded and nationwide energy efficiency schemes all to be funded for free. And as an energy provider we are in the unenviable position of having to pass this cost on to customers through energy bills.
“We will work with any political party on initiatives to keep bills as low as possible for customers and, in turn, we urge them to work together to achieve consensus in energy policy. And if politicians want to do something to make bills cheaper and fairer, they should take the cost of government policies out of bills and fund them through general taxation instead. Why wait until 2015? This would be far more progressive as those who can afford it would pay more while those most at risk of fuel poverty would be protected – taking around £110 out of their bills immediately.”
Energy secretary Ed Davey hit back at the suggestion that policy costs were the main driver of price rises.
He said: “Half of an average energy bill is made up of the wholesale cost of energy. This far outweighs the proportion of a bill that goes to help vulnerable households with their bills and to cut energy waste, and to encourage investment in the new low-carbon energy generation we need to keep the lights on. SSE’s own figures show that wholesale price rises have contributed more than policy costs to this price increase, as a share of the bill.”
The move also came in for criticism from consumer groups. Adam Scorer, director of Consumer Futures, said: ‘Although widely expected, this is the last thing consumers want as the Autumn chill sets in. SSE’s average direct debit, dual fuel, bill will be up to £1376 from £1272.
‘SSE and others who follow need to demonstrate why this rise is justified. Around two-thirds of the household bill is down to wholesale costs. Unfortunately, it is not simple to understand how individual firms are exposed to wholesale prices and what that means for retail price rises. That means we remain stuck with assertion and counter assertion adding little to the sum of human knowledge or the potential to act to make the market fairer.
‘But Government also has to acknowledge that energy policy costs are adding to consumer bills and carbon taxes will make that burden heavier still. This is not a call for schemes to be scrapped, but to look at how costs are recovered and how to protect those who may lose out the most, such as those who heat their homes electrically.