by a Newsnet reporter
Following Thursday’s announcement by Scottish and Southern Energy to introduce large increases in fuel prices to the consumer, energy costs appear likely to become a major political issue.
Scottish and Southern Energy SSE’s decision increases gas charges by 18% and electricity by 11% from September 14. The typical dual-fuel customers will now find themselves paying around £170 a year extra bringing the average fuel bill to £1,265 a year, a sum representing 6% of the average salary. Scottish and Southern Energy becomes the third energy company in recent days to announce a large price hike.
According to a statement from the company, the decision had been forced upon them by rising wholesale prices for electricity and gas. These had in turn been due to the “tsunami in Japan and political upheaval in the Middle East, and longer-term trends such as the fast-increasing energy needs of the Asian economies”.
British Gas and Scottish Power cited the same factors when they announced similar price rises earlier this month.
The Westminster government wants the “big six” utility companies to spend £200bn on renewing Britain’s entire energy infrastructure over the next decade. According to analysts the costs of this will eventually be passed on to consumers who will find themselves paying even more for energy.
Chris Hulme, the Lib-Dem Energy Minister in the Coalition Government, described today’s decision by Scottish and Southern Energy as “very disappointing news”.
SNP Westminster Energy spokesperson Mike Weir, MP for Angus, has expressed his concern about the latest round of price increases. Noting that the energy companies were still reporting large profits, he called on the Westminster government to launch an investigation into the energy industry. Mr Weir said:
“These hikes will hit households already struggling against other inflationary pressures. There is a limit to which people can keep absorbing massive energy price increases like this.
“It’s time for the UK Government to step in and take serious action. Rising fuel bills means increased VAT payments for the Treasury. This extra cash must be used to tackle fuel poverty.
“Yet again, like dominos, we have had the big six energy companies announcing mammoth energy price hikes claiming that they need to push prices up to make investments in the sector, and while that is true to some extent, they still need to explain why such huge profits are being made from residential customers.
“With fuel poverty amid energy plenty the energy market clearly is not working for the consumer and there is now an overwhelming case for an investigation into how the major energy market is operating.”
In April 2011 a YouGov survey showed that the number of households in fuel poverty had risen to around 6.3 million across the UK, just under one quarter of all households. Fuel poverty is defined as households which spend more than 10% of their income on fuel and energy costs. Families living in fuel poverty are especially vulnerable to fuel price increases.