Scottish Power price rises show energy firms act like cartel

Scottish Power has announced that it will increase gas and electricity prices by an average of seven per cent. 

This means that the total number of households in the UK affected by energy price announcements in the last few weeks has reached 19 million.

However, though this is the average, 84 per cent of Scottish Power customers will see an average rise of 8.7 per cent.

Consumer groups are urging customers to switch to a smaller supplier such as First Utility, Ovo Energy or the Co-operative to potentially save £200 a year.

They say that the fact that firms move to raise prices at the same time points to the energy suppliers operating like a loose cartel.

Which? executive director Richard Lloyd says: "It's disappointing to hear Scottish Power jumping on the energy price hike bandwagon and hitting hard-pressed customers just before winter sets in.

"We've seen this herd-like behaviour time after time. Competition doesn't appear to be keeping the companies in check and ensuring consumers get a fair deal. If the regulator won't fix this then the government must step in."

The increases will apply from December 3rd and will add £102 to the average annual dual fuel bill for direct debit customers, taking the yearly cost to £1,271 and a £106 price increase for households that pre-pay on a meter taking their average annual bill to £1,349.

Customers who pay by cash or cheque will see their annual dual fuel bills rise by £19 to £1,368.

Scottish Power supplies 2.3 million UK households with power.  Around 700,000 customers will be unaffected by the price rises because they are on fixed or capped price energy deals.

Scottish Power blamed the price increases on the rising costs of transportation and the cost of energy efficiency programmes.

Neil Clitheroe, ScottishPower’s CEO of Retail and Generation, said: “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.

“We work hard to protect our customers and we regret that we've had to announce a price increase today."

However, Ann Robinson, Director of Consumer Policy at uSwitch.com, said: "Another winter and another round of price hikes, so far affecting almost 19 million households.

Today's move will be no surprise, but consumers will be disappointed and angry that these increases will be hitting them in the winter when the blow will be felt hardest.”

SSE which trades as Scottish Hydro, Southern Electric sand Swalec announced price rises in August that apply from today. It raised prices by an average of nine per cent.

On Friday British Gas announced six per cent increases to the cost of both gas and electricity which applies from November 16th and npower introduced rises of 8.8 per cent for gas and 9.1 per cent for electricity which take effect from November 26th. 

E.On announced earlier in the year that it would not raise prices in 2012, but the odds of them doing so early in 2013 have shortened.

This just leaves EDF Energy, of the five remaining dominant suppliers, to sit or twist on price rises. As one analysts put it, “they are the last to blink.”

Consumer groups accused the energy suppliers of displaying the mentality of “pack” behavior.

Adam Scorer, of watchdog Consumer Focus, said: "The volley of price hikes all coming in during the winter period will fuel consumer concerns about the energy market.

"Every time this happens it makes it difficult for consumers to believe that price rises are driven by real supply and demand issues. It feels as if companies raise prices in a pack because they see safety in numbers.

"This does not mean that wholesale price pressures are not real. But when half the market raises prices in just four days, consumers will question whether this is in response to volatile commodity costs or simply pack behaviour."

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