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ScottishPower to Increase Standard Variable Prices

24/08/2018

  • Over two-thirds of homes supplied by ScottishPower unaffected by this price change
  • Affected Dual Fuel customers will see an average increase of 3.7%
  • Increase is due to over 20% increase in wholesale energy costs since April [1]
  • All affected customers will be offered an opportunity to move to a fixed price tariff to avoid the increase

ScottishPower will increase its standard variable domestic gas and electricity prices from 8th October 2018.  For those affected, dual fuel prices will increase by an average of 3.7% [2].

Less than one-third of homes supplied by ScottishPower (approximately 0.9m) will be affected. The other two-thirds of homes are on tariffs or payment methods not impacted by this price change.  

The price change follows continued increases in wholesale energy costs. These are the same cost pressures that led to OFGEM announcing a 4.4% increase to the prepayment safeguard tariff cap earlier this month [3]  – the second increase this year.

ScottishPower continues to lead the major suppliers in moving customers from standard tariffs [4], with over 60% of its non-prepayment customers on fixed price deals. The proportion on standard variable tariffs has continued to reduce during 2018, as ScottishPower no longer moves customers onto standard variable prices at the end of a fixed price deal.

Neil Clitheroe, CEO Retail said: “We have seen significant increases in wholesale energy costs since April, and like others in the industry, this means that we need to increase our prices.

“More than two-thirds of our customers are on fixed price products or other tariffs not impacted by this price change.  Those customers affected by the price change will be contacted and offered the opportunity to move to a fixed price tariff alternative and avoid this increase."


Notes:

 
  1. Wholesale Cost Increase: Since 20th April 2018, wholesale energy prices have increased by over 20%.

Date

Electricity (£/MWh)

Gas (p/th)

20th April 2018

50.52

53.66

22nd August 2018

62.31

66.95

% Change

23%

25%

Source: ScottishPower market data based on demand weighted average of Winter 18 and Summer 19 baseload prices.
 

  1. The Increase: For the average domestic GB customer with Ofgem’s typical annual consumption of 3,100kWh Standard rate electricity and 12,000kWh gas, the changes will be:

AVERAGE ANNUAL DUAL FUEL BILL (INCLUDING VAT)

CURRENT

8th October 2018

AVERAGE ANNUAL INCREASE

%AGE CHANGE

Direct Debit

£1,211

£1,257

£46

3.8%

Quarterly Credit

£1,311

£1,357

£46

3.5%

Average

 

 

£46

3.7%

 
  1. Prepayment safeguard tariff cap increase: Ofgem adjusts the level of the prepayment safeguard tariff cap twice a year based on a pre-defined methodology set by the Competition and Markets Authority to reflect the estimated underlying costs of supplying energy. On 7th August, OFGEM announced that from 1st October, the level of the safeguard tariff cap would rise by approximately 4.4% (£47 a year) for a dual fuel customer with typical energy consumption. The increase in the safeguard tariff cap is mainly due to higher wholesale energy costs.
     
  2. Percentage of non-prepayment domestic ScottishPower customers on standard variable tariffs in comparison to other major suppliers

SUPPLIER

PROPORTION OF NON-PREPAYMENT DOMESTIC CUSTOMER BASE ON STANDARD VARIABLE TARIFFS (%)

SSE

69%

BG

63%

E.ON

55%

EDF

51%

Npower

44%

ScottishPower

38%

Source: OFGEM (published July 2018)