Over seven million customers will be hit with gas and electricity price hikes from 15 November, after Scottish & Southern Energy (SSE) became the first of the big six energy firms to announce a price rise.

The rise affects customers of Atlantic, Scottish Hydro, Southern Electric and Swalec, which are all SSE brands.

Ebico and M&S Energy customers will also see rises as their energy is provided by SSE.

It's been rumoured over recent weeks that all the big six energy companies are about to announce hikes.

How much will prices rise by?

Prices for SSE customers, customers of its sub-brands, and M&S Energy customers will rise by an average of 8.2% for both gas and electricity from 15 November. (Join our free Cheap Energy Club to get the best tariff for you.)

This represents an increase of £106 on a typical yearly dual fuel bill.

Ebico's 50,000 customers will see prices increase by an average of 9% for electricity and by an average of 10% for gas, also from 15 November.

As these are average price rises, households could be hit with larger or smaller increases, depending on where they live and what tariff they've got.

Martin Lewis
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Who's affected?

All SSE customers, barring those on a fixed deal, will be hit by the price hikes. This includes anyone on one of the following tariffs:

  • Standard.
  • Fixed discount, which receive a specific percentage discount below SSE's standard tariff rate.
  • Online.
  • Prepay.

M&S Energy only has one variable tariff, which is its standard tariff. All customers on this standard tariff are affected. Customers on a fixed or capped tariff are unaffected.

Ebico has just two tariffs – one for electricity, and one for gas, both of which are variable. All customers on these tariffs will be affected by the price rises.

Can I get out of my contract?

SSE says its variable tariffs have no exit fees, so customers can leave penalty free at any time. Customers on its fixed discount tariff are normally charged a £50 exit fee, but this will be waived until 13 December if customers wish to leave as a result of the price rises.

Affected SSE customers will be told about the hikes in a letter, including their options to leave, which they should get by 15 October.

M&S Energy's standard tariff has no early exit fee, so customers can leave penalty-free at any time. Affected customers will be notified of the rise by 15 October by post or email.

Ebico's two tariffs have no early exit fees, so customers can leave penalty-free at any time. Ebico customers should get their letters by Saturday.

Will other providers follow suit?

The problem for households is energy providers are like sheep. Where one goes, the others follow. So today's announcement is likely to spark a domino effect, with other providers following suit.

Why is SSE hiking prices?

SSE's retail group managing director Will Morris says: "We're sorry we have to do this. We've done as much as we could to keep prices down, but the reality is that buying wholesale energy in global markets, delivering it to customers' homes, and Government-imposed levies collected through bills – endorsed by all the major parties – all cost more than they did last year."  

SSE last increased gas prices in October 2012, having lowered gas prices in March 2012. Before that, the last gas price rise was in September 2011. 

For electricity, SSE last increased prices in October 2012 and before that in September 2011. The 2011 rise was the first since August 2008. 

Why is Ebico hiking prices?

In a statement on its website, Ebico says: "There are several reasons for this increase, including the fact that cost of energy purchased to meet our customers' requirements for this coming winter has been higher than it was in the same period last year.

"In addition, the need for investment in electricity and gas networks means that the cost of using them has increased, whilst the cost of energy efficiency programmes and support for low-carbon energy has also risen."

The provider says it won't increase prices again until autumn 2014.

Consider fixing

Martin Lewis, creator of MoneySavingExpert.com, says: "The latest rise is likely to heap more misery on many families choosing between heating and eating this winter.

"And it's not just SSE customers. The big energy firms are like sheep. When one moves, the rest will almost certainly follow.

"Therefore now's not the moment to simply use a comparison site and switch to another provider, as you risk moving out of the frying pan and into the fire, possibly shifting to a firm that puts its prices up even more. If that's your plan, best hold until all have announced their hikes.

"Yet there is an opportunity right now to beat the hikes. That's because there are still competitive fixed tariffs available, though they're likely to be pulled soon.

"Here you can lock in and guarantee no price hikes for up to four winters. Those with typical bills on a standard tariff can typically lock in for that long and save £80 a year. Or they can choose to lock in for 18 months and to save £260 a year. Yet speed is of the essence."

Energy Secretary Ed Davey says: "This is clearly unwelcome news for customers of SSE. People should take the opportunity now to make sure they are on the best deal available to them."

Tips on cutting energy costs

Here are some top tips for saving cash on your energy bills.

Q. How do I prevent price hikes?

A. Many on standard tariffs can save and get no-price hike certainty with a cheap fix. But don't just call your provider and ask, as that risks locking you in at high cost. You need to get the market's cheapest deal.

However, this isn't all about price – consider tariffs with no exit fees, so you have the freedom to leave if things don't go as predicted.

Below are the current top deals (not for prepay customers), compared to the average dual fuel user on a standard tariff who pays £1,420/year.

  • Longest fixes (no exit penalties): Both EDF Blue+Price Freeeeze and Npower Price Protector let you fix until March 2017 and cost about £1,340 a year, so you get no hikes for four winters.
  • Cheapest no-exit penalty fix: Npower's Online Price Fix is fixed until 30 November 2014 at £1,180/year.
  • Cheapest fix: First Utility's iSave v9 is fixed longer than Npower's Online Price Fix, until April 2015, and at a slightly cheaper £1,170/year. But it could hit you with up to £60 in exit penalties.

Q. OK, So do I just switch to one of those?

A. Hold your horses, there are a few more things to know first.

  • ALWAYS do a comparison. Who's your winner and how much you can save depends on your usage and region. Don't just rely on the tariffs above – you should do a comparison – our free Cheap Energy Club will compare the market to give you the cheapest tariff tailored for you.
  • Is it worth fixing? If the comparison shows you can save and get certainty, it's a no-brainer. Others on a cheap tariff may need to pay more to fix. Only a crystal ball will show you whether this is right or wrong. So you need to decide based on your attitude to prices. The more big price rises would hurt, the more seriously you should consider fixing.
  • You could be due a lump sum. If you're in credit when you switch, your old provider needs to give you cash (put it aside, winter's coming, so usage is higher). Though if you're over £100 in debt, you'll usually need to pay that off first.
  • You can take your fix if you move. All the above fixes are portable (check others to see if you can take them to a new home).

Q. Isn't switching a big hassle? I don't like change.

A. No. Switch, and you keep the same gas, electricity and pipes. Only service and, crucially, cost changes. Yet it will take two months to switch across, which is why doing it now before big winter bills is so crucial. These days, switching is pretty simple, but, of course, for some there can be hassles.

There are two types of tariff to choose from. A variable tariff where prices can rise, and a fixed where they don't. Variables can be cheapest, but if you want certainty, for not much more, you can prevent price hikes.

Q. Anything else I can do to cut my bill?

A. If possible, pay by fixed MONTHLY direct debit and you get a discount of up to 6%. Though always do regular meter readings for accuracy, as your bill's estimated.

Q. I've heard some people switch to a cheaper price but have a bigger direct debit.

A. Direct debits are based on an estimate of your usage. Some find they switch to a cheaper tariff, but their direct debit rises. This is usually because the new firm over-estimates, or the old one under-estimates.

If it's too high and means you overpay, you'll get the money back later. If it's a problem, you've a right to ask them to lower it.

Q. I'm on a prepaid meter. Can I switch?

A. Yes. While some of the more competitive deals and fixes aren't available, it's still possible to save up to £150 a year. Do a comparison first, and also consider checking if you can move off prepay to a normal billed meter for free.

Q. All this is fine but I can't afford to pay my bill now, what can I do?

A. If you're seriously behind, or in general financial hardship, you may be able to get grants to help. Call the Home Heat Helpline on 0800 33 66 99.

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