By Bob Duncan
Unfair transmission charges that are hitting Scottish consumers need to be addressed a Scottish MEP has insisted.
SNP MEP Alyn Smith has criticised the lack of action from the UK government who have refused to change the unfair system that sees higher grid charges imposed on electricity producers north of the border than in the south.
Mr Smyth, who is a member of the European Parliament’s Industry, Energy and Research Committee, was commenting the day after Scottish and Southern Energy (SSE) revealed its intention to hike its prices this Autumn.
“This decision by Scottish and Southern Energy is yet further evidence that the UK Government’s refusal to overhaul its unfair, disadvantageous system of transmission charging is directly hitting Scots wallets.” said the MEP.
“Scotland already faces amongst the highest energy bills in Europe, forcing many in the country into fuel poverty and struggling to make ends meet, despite the country being the continent’s energy powerhouse.
“The UK government’s system of transmission charging has been shown to be flawed time and time again. A fundamental change is to need towards a more progressive system where developers and generators are not penalised for making use of the country’s natural resources because they don’t happen to be in London.”
SSE, one of Scotland’s largest energy providers, announced another huge increase in its gas and electricity prices at a time which will coincide with the beginning of the cold weather in mid-Autumn. Industry experts claim the move could prompt the other ‘big six’ energy firms to follow suit.
In a press statement released on Wednesday, SSE announced that from October 15th of this year the average price for its domestic customers will rise by 9%. Last September, it increased gas prices by 18 per cent and electricity tariffs by 11 per cent.
The latest increase is expected to affect 8.4m customers across the UK and will add an extra £119 to the average SSE standard dual fuel bill, bringing the average cost of a household bill to £1,354.
In the statement the company, which trades in Scotland as Scottish Hydro, pointed to the “cost of using electricity and gas networks” as the reason for its sudden hike, saying it had seen a 14 per cent increase in the average price in the wholesale market to secure gas for the coming winter.
The announcement has angered consumer groups. Ann Robinson, director of consumer policy at uSwitch.com, described the increase as “a serious blow for cash-strapped consumers”.
“Last winter, more than eight in 10 households (83%) rationed their energy use because of cost – a round of price hikes this winter will condemn many more to this misery too,” she said.
Martin Lewis of consumer website MoneySavingExpert.com warned of further energy-price misery to come. He said: “When one moves, others follow, and over the next three months I’d expect to see similar announcements.”
Friends of the Earth’s Head of Campaigns Andrew Pendleton said: “This is groundhog day for millions of people already struggling to power and heat their homes.
“It’s the rising price of gas that’s causing bills to rocket – the Big Six energy companies are keeping us hooked on imported fossil fuels that are costing us a fortune while polluting the planet.
“The Government must listen to the public and source more of our electricity from our wind, sun and waves. Securing clean British energy and stopping our homes leaking heat will boost jobs and save us all money on our fuel bills in future.”
On the other hand, investors in SSE applauded the price rises, which led to SSE stock rising sharply to top the FTSE leader board on Wednesday.
Dominic Nash at Liberum Capital estimates that the price hike in October will result in another £260m of revenues for Scottish & Southern, but said he recognises the sensitive nature of the stock.
“You’ve got to have fairly thick skin to be an investor in this. It will probably be on the front page of The Daily Mail tomorrow and you will get a lot of politicians jumping up and down,” he said.
Na h-Eileanan an Iar SNP MP, Angus Brendan MacNeil has also expressed his concern over Scottish and Southern Energy’s plans to increase prices.
“The last thing people need is another round of price hikes from the big six companies, just before the worst of the winter weather kicks in. There is a limit to how much people can keep absorbing massive energy price rises like this,” he said.
“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.
“It’s unacceptable that fuel poverty is on the rise in an energy plenty nation like Scotland. 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 May, SSE reported a 2% rise in annual pre-tax profits to £1.33bn, though profits in its division which supplies electricity and gas to homes and businesses fell 20% to £321.6m.
