Low energy users face steepest price hike from Scottish Power

The giant announced earlier this month it will raise electricity prices by 10% and gas prices by a whopping 19% from 1 August, in a bitter blow to 2.4 million households (see Scottish Power to hike energy prices news story).

Other firms are also expected to hike prices, but haven't announced plans yet.

But findings have emerged this week, highlighting how low usage customers will face the brunt of the rises.

The average low energy user on a standard dual fuel Scottish Power tariff will pay £862 from 1 August, which is up 19% on the £722 customers are currently paying.

However, the average high energy user on a standard dual fuel Scottish Power tariff will see their bills increase by the smaller amount of 15%, taking their annual bill up to £1,658.

Price comparison site uSwitch.com does not expect other firms to mirror this move by disproportionately raising costs for lower users.

Why are low users facing greater increases?

Energy tariffs are generally split into two tiers, where consumers pay a higher rate for the first few units they use, after which the price drops per unit of energy to the cheaper second tier rate.

The issue is that low usage customers have a larger proportion of their bill made up of the first tier rate and as Scottish Power's 'tier 1' rates are set to rocket in August, this means low usage customers face steeper price rises.

The average electricity rate on a standard tariff will increase by 29% per unit for 'tier 1' with the price jumping from a typical 17p to 22p, compared to no increase in the 'tier 2' electricity rate.

'Tier 1' gas prices will also see a greater increase of 23% per unit of energy, compared to a 20% increase for tier 2, taking prices to a typical 7.7p and 3.5p, respectively.

Tom Lyon, energy expert at uSwitch.com, says: "We have no reason to think that other suppliers will be doing the same – it's really a waiting game to see what they actually do.

"But, from the consumer perspective this move by Scottish Power does seem counter-intuitive. People are being actively encouraged to reduce their energy consumption but these changes could be seen as a dis-incentive to cut down."