Fury as energy giant hikes fuel prices by 8%

The company, which has around 10 million customer accounts, blamed the increased cost of buying and delivering wholesale energy as well as Government levies collected through bills.

It said the latest increase, which is three times the rate of inflation, would come into effect from November 15.

SSE, which trades as Southern Electric, Swalec and Scottish Hydro, said the hike equated to an average £2 a week for a typical dual fuel customer.

SSE last put up bills, by 9%, a year ago. Its retail operation serving household customers saw profits increase 28% to £410.1 million in the year to March as gas consumption increased by a fifth during a period that included a bitter winter.

Overall pre-tax profits were up from £1.34 billion to £1.41 billion.

But in a trading update last month, SSE revealed it made a loss on its retail operations over the summer after wholesale gas prices rose.

Now it says it has been forced to raise tariffs as the price of buying energy in global markets has risen by 4% for a typical dual fuel customer, while paying to use upgraded electricity and gas networks is 10% more expensive.

Rising energy bills have become a key political issue after Labour leader Ed Miliband pledged that he would freeze tariffs if elected Prime Minister.

There has been increasing speculation that a number of the major energy suppliers were preparing to put prices up this autumn.

Chief executive Alistair Phillips-Davies has previously said that the solution to bringing down prices would be to remove “stealth taxes” on bills which fund low-carbon energy and efficiency schemes.

But in York today David Cameron labelled Labour’s proposed policy of freezing energy prices a con as the party would not be able to keep its promise.

Speaking at a PM Direct event in York, the Prime Minister said it was a con because Labour would have no control over world energy prices.

“Of course it’s very attractive to say ‘I’m going to freeze energy prices for 20 months’ as Ed Miliband has done,” he said.

“But it’s basically a con - it’s a con because he is not in control of the worldwide price for gas.

“So he can’t guarantee keeping that promise as gas prices could go shooting up and in that case he’d have to break his promise, or the price could go shooting down and then a freeze wouldn’t be as good as what customers would get.

“So it’s a con and what we need to do is make changes to the energy market to make sure we can have low prices and hopefully keep those low prices for as long as possible.

“We have to address the core issue of prices rather than come up with what is effectively a con.”

He went on: “I want to see energy bills low not just for 20 months - I want to see them low for 20 years.

“We need to address all the things that are causing energy bills to rise.

“So we have to have a competitive market between the energy companies and we have to bring on new sources of fuel such as shale gas which has revolutionised fuel in America.

“And, as for green levies, they shouldn’t be there for a moment longer than they are necessary.

“We need to have a balanced energy policy in this country.”

As a result of today’s SSE announcement, customers in the South East will face rises of around 9.7% and at the lower end many in the North and southern Scotland will see bills go up 7%.

Those who use a particularly high proportion of energy at off-peak times may experience a higher percentage increase.

SSE said around 4.4 million household electricity customers and 2.9 million household gas customers in Britain would be affected by the rise. Others are on fixed-price deals.

The average annual standard dual fuel bill, for a customer who pays by direct debit and receives a paper bill, will rise from £1,274 to £1,380

Mr Morris sought to deflect public anger by directing blame on to politicians.

He said: “We know we will come in for a great deal of criticism for this decision and politicians will no doubt be lining up to condemn us.

“But 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.”

SSE said efficiency measures had seen energy consumption fall in recent years and a typical bill at new prices would have been £400 higher had usage remained at 2005 levels.

It said transferring costs of “environmental and social policies” to the taxpayer would take up to £4 billion off UK energy bills, cutting each by around £110.

The company said it expects to miss its target for profit margins of 5% in the current financial year, arguing this was a fair amount and comparable to other firms providing everyday essentials, such as food retailers.

Energy Secretary Ed Davey sought to play down the effect of Government levies - designed to help vulnerable households with energy costs, cut energy waste, and encourage investments in low-carbon generation - on the bill rise.

He said these were far outweighed by the wholesale cost of energy.

Mr Davey said: “This is clearly unwelcome news for customers of SSE. People should take the opportunity now to make sure they are on the best deal available to them.”

Energy minister Michael Fallon told Sky News: “It is disappointing news. It is for the company to justify a big increase of that kind.”

Martin Lewis, of the Moneysavingexpert website, said the price hike would mean many people this winter will have to choose “between heating and eating”.

“The most important thing to understand is that the big six energy companies are like sheep - where one goes, the rest will almost certainly follow in the next three months.”

Shares in FTSE-100-listed SSE were up 1% on the announcement.