ScottishPower is to increase its domestic gas and electricity prices from 6th December 2013 following rises in forward wholesale energy costs, increased energy delivery charges and increased costs to support compulsory social and environmental schemes. Dual fuel prices will increase by an average of 8.6% . Gas prices will increase by an average of 8.5% and electricity prices by an average of 9.0%.
The average annual dual fuel bill for a customer will increase by £113. This is primarily driven by:
All these costs have had a significant financial impact as shown in the Group’s financial results for the first nine months of 2013 presented yesterday, which detailed an operating loss of £23 million for ScottishPower’s combined Retail and Generation activities in the UK. At the same time, ScottishPower has more than doubled its annual investment programme from £600million in 2006 to £1.3billion this year while continuing to be a strong payer of taxes with £2billion paid since 2007.
Neil Clitheroe, ScottishPower’s CEO 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. Recently we announced a range of measures to help our most vulnerable customers this winter. 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.”
ScottishPower is also simplifying its pricing structure and reducing the number of different tariffs it offers in line with Ofgem’s Retail Market Review reforms, including:
From next year, social tariffs will soon no longer be supported by the Government’s Warm Home Discount scheme. ScottishPower is the last of the major energy companies to remove this type of tariff. However, we are taking steps to assist these customers by delaying any price increase for our Fresh Start social tariff until 1st March 2014 – helping these customers through the winter period. From 1st March these customers will be moved to standard prices for their payment method.
ScottishPower will shortly commence writing to 2.2 million affected customers, with personalised information explaining their prices. More than 1 million customers on capped or fixed products will not be affected.
We will write to every customer affected with a personalised quote for the change in their estimated annual energy bill. For the average domestic GB customer using the existing Ofgem typical annual consumption values of 3,300kWh electricity and 16,500kWh gas, which will be in place until 31st December 2013, the changes are:
Ofgem recently announced that from January 2014, it will reduce its benchmark typical annual consumption values for electricity to 3,200kWh (3% reduction) and for gas to 13,500kWh (18% reduction). This reflects the significant increase in energy efficiency investment in GB over the last few years. At these new benchmarks, the revised bill values are:
Since last winter there have been many factors that have contributed to putting upward pressure on prices. Using the new Ofgem typical annual consumption values (above) which will become effective on 1st January 2014, the average annual bill increase is £98, inclusive of VAT. This is driven by:
Breakdown of costs for a typical £100 monthly energy bill in 2013, inclusive of VAT