SSE becomes the last of the big six to hike bills following Ofgem price cap rise
SSE has become the last of the big six energy firms to hike prices to the maximum allowed under the new cap on standard variable tariffs (SVTs) – hitting customers with an average 10.3% price rise from Monday 1 April.
SSE's hike will affect more than two million customers on its SVT, adding £117/year to a typical household's bill.
The rise is in response to regulator Ofgem increasing the level of its price cap on standard and default energy tariffs, and follows similar moves from British Gas and Scottish Power on Tuesday, and E.on, EDF and Npower last week.
Some 11 million bill-payers are on a big six standard tariff and the rises will mean an increase to £1,254/yr for a dual-fuel household, with typical use.
Yet this ISN'T the maximum anyone will pay, as the price cap places a maximum charge on the rate you pay for gas and electricity – use more and you'll pay more, use less and your costs will be lower.
Now all the big six have increased prices, a typical household on one of their SVTs will be paying on average £33/yr more than before the price cap came into effect in January, and £123/yr more compared with a year ago.
Why are prices rising?
The energy price cap limits the amount suppliers can charge for each unit of gas and electricity, and sets a maximum daily standing charge (what you pay to have your home connected to the grid).
It's reviewed twice a year, in April and October, and earlier this month Ofgem announced it would be raising the price cap from £1,137/yr to £1,254/yr for households with typical use (again, that's NOT the maximum householders can be charged).
It's blamed the increase on higher wholesale energy costs caused by rising oil prices, as well as factors such as green energy schemes and higher demand during the 'Beast from the East' weather event last year.
MoneySavingExpert.com founder Martin Lewis predicted two weeks ago that "most of the big six providers [would] snuggle their prices right against the cap".
How have big six prices changed?
A year ago – despite being among the most expensive types of tariff – the big six's SVTs were over £120/yr lower than they will be under Ofgem's incoming price cap rate from Monday 1 April.
After a series of hikes during 2018, the average big six standard tariff had risen to £1,221/yr by December, before Ofgem's price cap came into force.
The regulator set the initial price cap rate to £1,137/yr based on typical use – reducing prices by £84/yr, albeit for just a few months. However, as expected, all the big six will now increase their rates to the new maximum from 1 April.
Despite the considerable increase to the new price cap rate, Ofgem says that customers on SVTs would be paying about £75-£100/yr more on average if it wasn't for the action it has taken, even after the upcoming April hikes.
The table below shows big six SVT prices from a year ago, from before the price cap in December 2018, following the initial cap in January this year, and how they'll change after this April's latest price cap.
|Note: Assumes you pay by monthly direct debit. Costs vary by region. Assumes Ofgem's typical usage of 12,000 kilowatt hours of gas and 3,100 kilowatt hours of elec a year.|
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