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ScottishPower Domestic Energy Prices to Increase by Average of 7%

15/10/2012

  • Gas and electricity prices to increase by an average of 7%[1]
  • Increases will affect approximately 2.3 million households
  • Around 700,000 households will be unaffected as they are on a Fixed or Capped Price energy deal with ScottishPower

ScottishPower has announced increases for its domestic gas and electricity prices by an average of 7% following a sustained rise in its costs since the company last reduced its gas prices in February this year.

From 3rd December 2012 the price change will result in an average standard dual fuel bill, for a customer paying monthly by Direct Debit, increasing by £2 per week[2]. Approximately 2.3 million households will be affected. 700,000 customers will not see an increase as they are on one of the company’s fixed price or unaffected capped tariffs.  
 
The price change will result in the following increases for an average combined gas and electricity bill[2]:

  • A monthly Direct Debit customer will see an increase of 8.7%,with a new average annual Dual Fuel bill of £1,271
  • Quarterly Cash or Cheque customers will see an increase of 1.4%, with a new average annual Dual Fuel bill of £1,368 (excludes Prompt Payer discounts)
  • Prepayment customers will see an increase of 8.6%, with a new average annual bill of £1,349

For most of 2012 ScottishPower has seen a sustained increase in its costs and the company expects these to continue to rise for the rest of this year. These include a 34%[3] increase in the cost of delivering Government schemes including energy efficiency programmes. These schemes are designed to reduce greenhouse gas emissions and deliver ways to keep homes warm for less in the long-term.

Other increases include an 11%[4] rise in the cost of transporting gas and electricity to customers, and an 8%[5] rise in wholesale energy costs.

Neil Clitheroe, ScottishPower’s CEO of Retail and Generation, said: "We work hard to protect our customers and we regret that we’ve had to announce a price increase today.  We reduced our gas prices in February but for most of the year we have been absorbing increased costs especially for transporting gas and electricity to our customers’ homes and the cost of delivering energy efficiency programmes.  However, we remain committed to continuing to work with the Government to help reduce the amount of energy we all use and help our customers reduce their energy bills over the longer term.  To date, ScottishPower has insulated 0.8 million homes. 

“All of our available tariffs are open to both new and existing customers, and ScottishPower recently topped an independent Which? survey to check if energy suppliers are actively promoting their best offers to customers^.

“We will be writing to all those affected customers over the coming weeks explaining what the price increase will mean for them.  We will also give advice on how they could reduce the impact of these increased costs. We understand that this is a difficult time for many people and we encourage our customers to contact us.
“We will continue to try to help our customers by offering competitive fixed price products and also through the commitments we have made to help our vulnerable customers through this winter.” 

ScottishPower’s existing Online Fixed Price Energy April 2014 tariff is still available to both new and existing customers.Δ

ScottishPower also announced a simplification of its pricing structure. This includes the introduction of national standing charges within our standard prices for each payment method, and changes to discounts - making them more consistent across fuels and payment types, and easier to compare with those of other suppliers.
In September ScottishPower announced a series of measures designed to help protect its most vulnerable customers during the winter months.

These included a commitment to write to all customers who pay for their energy on a quarterly basis by cash or cheque, with a personalised estimate of how much they can save by making changes to their energy account. This builds on the success of ScottishPower’s three-month tariff check campaign last winter, which resulted in just under 37,000 ScottishPower customers changing tariff, saving them more than £6.3 million off their combined annual bills.

[1] Based on a weighted average of impacted ScottishPower customers who pay monthly by Direct Debit, quarterly or using a prepayment meter, averaged across Great Britain, with annual standard rate electricity usage of 3,300kWh and annual mains gas usage of 16,500kWh.  Excludes prompt payer discounts.

 [2] Unless otherwise stated all calculations are based on a GB average ScottishPower standard Dual Fuel customer with annual mains gas usage of 16,500kWh and annual Standard Rate electricity usage of 3,300kWh. Prices effective as of 3rd December 2012. All figures shown include VAT at the current applicable rate of 5%.

[3]Average percentage based on our outlook for environmental and social obligations for the year commencing April 2012 as compared to the year commencing April 2011.

[4]Average percentage based on the increased charges published by the electricity and gas network operators for the year commencing April 2012 compared to the year commencing April 2011.

[5]Average percentage based on the 12 month forward wholesale energy cost as at September 2012 compared to the 12 month forward wholesale energy cost as at January 2012.

^ Based upon Which? Energy Sales: Don’t Get Caught Out Survey Published Feb 2012 www.which.co.uk/energy/saving-money/guides/energy-sales-dont-get-caught-out/buying-energy-over-the-phone/

Media information: Simon McMillan 0141 614 4582/ 07753 622 257 & Paul Ferguson 0141 614 4535/ 07702 665 924

ΔOnline Fixed Price Energy April 2014 Offer key facts:

  • Online Fixed Price Energy April 2014 Offer prices will remain fixed until 31st March 2014 but your Direct Debit and/or bill amount may vary depending on your gas and/or electricity usage.
  • This Offer is only available to No Standing Charge customers who take both gas and electricity or electricity only, pay their bills by monthly Direct Debit, variable Direct Debit or online Debit Card; their electricity meter is either a single or two rate meter and who manage their account online.
  • No Cancellation Charges
  • Limited offer subject to availability and may be withdrawn at any time
  • Our general terms and full product Terms and Conditions apply. For details visit www.scottishpower.co.uk

 
Q1. Why are you announcing a price increase? 

A1. We are seeing a significant increase in costs. These include an 11%[4] increase in the cost of transporting gas and electricity to customer’s homes, a 34%[3] increase in the cost of delivering Government schemes including energy efficiency programs. These schemes are designed to reduce greenhouse gas emissions and deliver ways to keep homes warm for less in the long-term, and an 8%[5] increase in wholesale energy costs.    

We have been absorbing these extra costs for as long as possible as we want to minimise the impact on customers. However, we have had to review our position and this means that our gas and electricity prices will be increasing with effect from 3rd December 2012.

Q2.  How many customers will be affected?

A2. There will be c2.3m of our current domestic households affected by this increase. ScottishPower will contact all affected customers by the 2nd November with a personalised communication outlining what it means for them.

Q3. How can customers minimise the impact of this change?

A3.Approximately 0.7 million domestic customers will be protected from the price increase due to the Fixed/Capped tariffs that they are currently on, highlighting the benefits that these products can have in providing price security.

For those customers affected by the price increase, we would encourage them in the first instance to ensure that they are on our best tariff and payment method for their circumstances. For assistance on this customers should call 0845 2700 700 (lines open Mon to Fri 8am to 7pm and Sat 8.30am to 1pm) for an account review, where we will be happy to take them through their options, or go online to www.scottishpower.co.uk. All of our available tariffs are open to both new and existing customers. ScottishPower recently topped an independent Which? Industry survey to check if energy suppliers are actively promoting their best offers to customers^.

In addition there are many other ways which could save money on energy bills – for example

Switch to pay by Direct Debit and change to our Online Energy Service.
Customers could also reduce their energy bills by making sure their home is more energy efficient. Just a few simple changes could make a big difference to fuel bills.
Our Energy Efficiency Advisors can give energy efficiency advice and information on grants that may be available.
We can also offer a free, individual home energy efficiency audit which will give our customers specific advice for their home.
Find out more at www.scottishpower.co.uk/energyefficiency

Q4. When did ScottishPower last change household energy prices in the UK?

A4. ScottishPower decreased gas prices by 5% on the 27th of February 2012. It has been over a year since our last price increase.

Q5. What will happen to customers’ bills?

A5. Affected customers’ prices will increase with billed amounts varying according to usage. ScottishPower has delayed this increase for as long as possible for our customers and we continue to offer a competitive range of tariffs. We encourage our customers to make sure they are on our best deal for them. Customers should call 0845 2700 700 for an account review where we will be happy to take them through their options and may be able to offer them a better deal for their personal circumstances. 

Q6. What is ScottishPower doing to help its most vulnerable customers?

A6. ScottishPower recently announced a number of Winter Commitments, which were designed to assist our most vulnerable customers through the Winter period. This includes the Warm Home Discount scheme which is a programme of support aimed at households who are living in, or are at risk of, fuel poverty. Certain customers will qualify automatically for a rebate and will receive a letter from the Department of Work and Pensions telling them this. Others can apply to ScottishPower for the rebate if they meet certain eligibility criteria**. In the second year of the scheme commencing on 1st April 2012, the rebate is £130. ScottishPower will not place any upper limit on the number of customers who can receive this rebate, should they meet the criteria. All customers who are eligible, and apply within the specified timeframe, will receive the discount. To find out more go to www.scottishpower.co.uk/warmhomediscount

Q7. What changes have been made to customer discounts?

A7. We have adjusted our discount structure to bring it more in line with the rest of the industry making it easier to compare our tariffs with other suppliers.  ScottishPower will continue to offer the same structure of discounts that customers have shown they like and expect from their energy company.  The updated discounts are as follows:-

Dual Fuel: An annual discount of £10.50 inc. VAT per customer for taking both gas and electricity from ScottishPower
Online: An annual discount of £10.50 inc. VAT  per Dual Fuel customer and (£5.25 inc. VAT) per single fuel customer for managing your account online
Prompt Payer: An annual discount of £31.50 inc. VAT  per Dual Fuel customer (£15.75 inc. VAT ) per single fuel customer) who pays quarterly by cash or cheque and settles their account within 14 days.

Q8. When will ScottishPower’s customers find out more about the price increase?

A8. ScottishPower will contact all affected customers by the 2nd November with a personalised communication outlining what it means for them.

Q9.Have you increased your standing charge?

A9. We are making our charges and tariffs clearer and simpler for customers. That’s why we are moving to a single national standing charge for our standard prices for each payment method.

On average our standing charges are reducing, however some customers will see an increase due to the current differential by geographical location. The impact to a customer will be detailed in the personalised communications which they will receive by the 2nd November.

Q10. What is covered by the standing charge and how does it work?

A10. Our standing charge covers the fixed costs to service customers’ accounts, the costs that do not vary with the consumption of individual customers. The standing charges are recovered using a daily charge.

Q11. Do you offer a no standing charge option?

A11. Yes. Our customer research shows that 35% of customers still prefer a no standing charge tariff, and we have therefore retained this option for our customers to offer choice. (Customers on a no standing charge tariff pay a higher unit rate for the first tranche of energy, which means that the vast majority pay the same as standing charge customers.)

Q12. Why are there different standing charges and unit rates dependent on customer’s payment methods?

A12. We take account of the different costs of managing and servicing different payment method when setting prices. These costs can vary significantly by payment method.

We actively encourage customers, who can, to consider alternative cheaper ways to pay such as by Direct Debit and by paying and managing their account online.

Q13. Why are cash or cheque quarterly bills not increasing by the same percentage as Direct Debit and Prepayment bills?

A13. Our prices for cash or cheque quarterly customers are more expensive than for Direct Debit and Prepayment. This is because of the higher operational costs incurred when customers pay by cash or cheque quarterly.  While the existing price differences are reflective of the differences in costs, we have decided to apply a smaller percentage increase to credit customers so as to bring the extra charges closer to those applied by other suppliers. However, we actively encourage customers, who can, to consider alternative cheaper ways to pay.

Q14. Why is the Prompt Payer discount for cash or cheque quarterly customers reducing?

A14. We have adjusted our discount structure to bring it more in line with the rest of the industry making it easier to compare our tariffs with other suppliers. At the same time this narrows the differential between a prompt and late paying customer’s bill.

Q15. What is ScottishPower doing to help customers who may have difficulty in paying their energy bills?

A15. We know that for many reasons customers can sometimes have difficulty paying their bills. If customers are struggling to pay we may be able to help. We want to work with our customers to try to agree a reasonable repayment plan that is best suited to the customer and is based on their current circumstances. We may also be able to advise our customers of other organisations that will be able to help, for example, providing debt advice for household bills.

We also encourage our customers to make sure they are on our best deal for them. Customers should call 0845 2700 700 for an account review where we will be happy to take them through their options and may be able to offer them a cheaper deal.

There are many ways which could save money on energy bills – for example

  • Switching to pay by Direct Debit and changing to our Online Energy Service.
  • Customers could also reduce their energy bills by making sure their home is more energy efficient. Just a few simple changes could make a big difference to fuel bills, with no loss of comfort.
  • Our Energy Efficiency Advisors can give energy efficiency advice and information on grants that may be available.
  • We can also offer a free, individual home energy efficiency audit which will give our customers specific advice for their home. 
  • Find out more at www.scottishpower.co.uk/energyefficiency

In September ScottishPower announced a set of Winter Commitments to help support people through the winter months, particularly those most vulnerable. These include:

Free insulation. The company will offer any qualifying household free loft and cavity wall insulation#, which could help to save up to £310 on an average energy bill.* There is no requirement to be a ScottishPower customer in order to qualify for this offer. To find out more go to call 0845 601 7836 (Lines open Monday to Friday, 9am – 5.30pm).

A targeted tariff check campaign. ScottishPower will write to all its customers who pay for their energy on a quarterly basis, with a personalised quote to estimate how much they can save by making changes to their energy account. This builds on the success of our three-month tariff check campaign last winter, which resulted in just under 37,000 ScottishPower customers changing tariff saving them more than £6.3 million off their combined annual bills.

Warm Home Discount Guarantee. The Warm Home Discount scheme is a programme of support aimed at households who are living in, or are at risk of, fuel poverty. Certain customers will qualify automatically for a rebate and will receive a letter from the Department of Work and Pensions telling them this. Others can apply to ScottishPower for the rebate if they meet certain eligibility criteria**. In the second year of the scheme commencing on 1st April 2012, the rebate is £130. ScottishPower will not place any upper limit on the number of customers who can receive this rebate, should they meet the criteria. All customers who are eligible, and apply within the specified timeframe, will receive the discount. To find out more go to www.scottishpower.co.uk/warmhomediscount

A 3-month debt recovery break for some of our most vulnerable prepayment customers. We will shortly write to these customers and advise them that we will not be collecting any debt repayments for a 3 month period over the winter from December 2012 to February 2013. This should ensure that any payment made by these customers will be purely for energy that is used during the 3 month winter period.

No Winter Disconnections. ScottishPower will not disconnect any domestic customers for debt between November 2012 and February 2013.
^ Based upon Which? Energy Sales: Don’t Get Caught Out Survey Published Feb 2012 www.which.co.uk/energy/saving-money/guides/energy-sales-dont-get-caught-out/buying-energy-over-the-phone/

# Qualification criteria and applicable Terms and Conditions are available from www.scottishpower.co.uk or call 0845 601 7836 (Lines open Monday to Friday, 9am-5.30pm).

* Estimate based on installing cavity wall insulation and full loft insulation in an average gas semi-detached house with 3 bedrooms.

** Full eligibility criteria, application timeframes and rebate details are available from
www.scottishpower.co.uk/warmhomediscount or call 0800 027 2700 to speak to an advisor (Lines open Mon to Fri 8am to 6pm, Sat 9am to 1pm).

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