Scottish Power hikes prices by 8.6%

Npower, Scottish and Southern Energy (SSE) and British Gas have already announced gas and electricity price increases (see the Npower, SSE and British Gas MSE News stories).

It's been rumoured over recent weeks that all big six energy companies will be hiking prices.

How much will prices rise by?

Prices for 2.2 million Npower customers will rise by an average of 8.6% – up 9% on average for electricity and 8.5% on average for gas from 6 December. (Join our free Cheap Energy Club to get the best tariff for you.)

This represents a £113 increase on a typical yearly dual fuel bill, from £1,311 to £1,424.

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.

Who's affected?

Scottish Power customers, barring more than a million users with fixed and capped price tariffs, will be hit by the price hikes from 6 December. This includes prepay customers.

Customers on Scottish Power's Fresh Start social tariff will see the price hikes come into force from 1 March 2014.

Can I get out of my contract?

Scottish Power says any customer on a variable tariff affected by the price rise can switch at any time, penalty-free.

On average, Scottish Power charges a cancellation fee of £25 for electricity and £25 for gas, although these can vary.

Will other providers follow?

The problem for households is energy providers are like sheep. Where one goes, the others follow. So it's likely other providers will announce price hikes in the near future.

Why is Scottish Power hiking prices?

Scottish Power says the main drivers behind the price rises are increases in delivering energy to homes, fulfilling Government schemes and increases to the cost of buying energy wholesale.

Neil Clitheroe, Scottish Power's chief executive of energy retail and generation, says: "The cost of purchasing and delivering energy to homes across Britain has risen significantly this year.

"With an increase in costs for delivering compulsory schemes to reduce carbon emissions and improving energy efficiency in homes, we unfortunately have no other option than to pass these on by increasing our prices for customers.

"We understand that these are difficult times for many families, and we have done what we can to hold our prices for as long as possible. Recently we announced a range of measures to help our most vulnerable customers this winter.

"We will now write to every customer who will be impacted by the price increase, and we would encourage anyone who is concerned to contact us so we can discuss their options."

Scottish Power last upped its prices on 3 December 2012, when gas and electricity rose by an average of 7%.

Consider fixing

Martin Lewis, MoneySavingExpert.com creator, says: "The energy-switching landscape is changing rapidly. Even in the time between Npower announcing hikes last Friday and Scottish Power becoming the inevitable fourth to hike today, things have changed.  

"The best course of action is for most people to compare and lock in on a cheap fixed tariff if it can save them money.  "Yet with the Prime Minister mooting he may shift the goalposts and move the cost of green measures away from energy bills, there is a note of caution – there's a small chance things could get cheaper. 

"So it's now even more important, if you are fixing, to focus on one without an exit penalty, so if things do change you can ditch easily.

"Someone on typical bills can lock in for four winters with no hikes guaranteed, and no exit fees, and save £80 a year. Or they can lock in for over a year and save £250. This is still a very attractive option, while it's available."

Government intervention

Energy Secretary Ed Davey says: "With fifteen independent energy suppliers to choose from outside the big six, it's surprising these companies think they can keep getting away with bill hikes of this magnitude.

"As more and more people shop around for the competitive deals on the market, some of which are offered by the independents, companies like Scottish Power can no longer put their bills up in this way with no consequences.

"The Government is looking at how to get people's energy bills as low as possible to help hard-pressed households."

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): Npower's Price Protector tariff is fixed until 31 December 2017 and costs about £1,370 a year. Meanwhile EDF's Blue+Price Freeeeze is fixed until 31 March 2017 and costs about £1,340 a year. So with both tariffs you get no hikes for four winters.

• Cheapest no-exit penalty fix: EDF's Blue + Price Promise is fixed until until 31 March 2015 at £1,180/year.

• Cheapest fix: First Utility's iSave v11 is fixed longer than EDF's Blue + Price Promise, until 31 May 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). If you're in debt when you switch, if you're on prepay, you can switch if the debt's £500 or less. If you're on a credit meter, it varies by supplier and payment method. British Gas and Scottish Power told us you'd need to pay off the debt before switching away. The other big six suppliers may let you switch then pay it off. 

• Check if you can take the fixed deal you're after to a new home if you move.

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. but only with British Gas and the limited competition means here the cheapest fixes are far from cheap. Its longest fix, which lasts three winters (till March 2016) may turn out to be a good deal if prices rise hard, but it's a tough call as you pay a lot more now. If you're looking at non-fixes, while those on standard deals should save, you risk moving to a firm that'll soon hike. So you may be best waiting until all have hiked, so it's a level playing field to compare. You can compare prepay tariffs using our Cheap Energy Club. It's also worth considering shifting to a billed meter, if your credit score allows. For how to do this cheaply, see the Cheap Prepay guide.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.