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Anger as energy bills rise by 8.2%
Energy giant SSE was engaged in a war of words with ministers today after announcing it was raising gas and electricity bills by up to 10% for millions of households.
The row erupted after the supplier became the first firm to hike tariffs this autumn, adding a typical £106 to annual dual-fuel customer charges to reach £1,380.
SSE said levies to pay for low-carbon generation and energy efficiency had risen sharply but Energy Secretary Ed Davey hit back saying these were far outweighed by wholesale prices and suggesting customers ought to look elsewhere for cheaper bills.
It is widely thought that the company's announcement will herald a series of rises among the other Big Six UK energy suppliers - Centrica, EDF, Scottish Power, E.ON and npower.
SSE's price hike will see an average increase of 8.2%, three times the rate of inflation, affecting 4.4 million household electricity customers and 2.9 million gas users. It has around 9.5 million customer accounts, many of which are on fixed-price tariffs.
Regional variations mean rises will range from 7% in northern England and parts of Scotland to 9.7% in the South East. They will be higher for those who use a high proportion of cheaper energy at off-peak times.
SSE, which trades as Southern Electric, Swalec and Scottish Hydro, said the rise would come into effect from November 15, and it pledged not to lift them again for a year.
It last increased tariffs a year ago, by 9%, just before a bitterly cold spell.
The bad weather helped the FTSE 100-listed firm to increase annual profits at its household retail arm by 28% to £410.1 million as gas consumption rose by a fifth. Overall pre-tax profits in the year to March rose from £1.34 billion to £1.41 billion.
But in a trading update last month, SSE revealed that it made a loss on its retail operations over the summer as wholesale prices rose.
Labour leader Ed Miliband said the price hike announcement showed the need to freeze prices - which his party has pledged to do if elected.
Will Morris, group managing director of retail at SSE, apologised to customers but said it had been forced to raise tariffs amid rising costs.
The company said wholesale energy prices were up 4%, paying to use newly-upgraded networks by 10% and Government-imposed levies up 13%.
SSE argued that the cost of funding low-carbon energy and efficiency schemes ought to be shifted to the taxpayer, taking £110 off bills.
Mr Morris said: "We know we will come in for a great deal of criticism for this decision and politicians will no doubt be lining up to condemn us.
"But over many years policymakers themselves have failed to highlight adequately the cost to consumers of the policies they have pursued in Government.
"They can't expect to have power stations replaced with new technologies, the network to be upgraded and nationwide energy efficiency schemes all to be funded for free."
But Mr Davey said the cost of wholesale energy far outweighed the proportion of a bill that goes on levies to help vulnerable households, cut energy waste and encourage investment in low-carbon energy generation.
He said: "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."
Martin Lewis, of the Moneysavingexpert website, said the price hike would mean many people this winter will have to choose "between heating and eating".
"The most important thing to understand is that the Big Six energy companies are like sheep - where one goes, the rest will almost certainly follow in the next three months."
Citizens Advice chief executive Gillian Guy said the rise was a blow to stretched budgets at a time when many were turning to food banks to feed their families as they struggled to cope with the rising cost of living.
She said: "Many households are facing a daily battle to try to make their frozen incomes cover mounting energy, food and travel costs. Further increases will push people into poverty."
The Prime Minister's spokesman said David Cameron "really, really" understood the pressure on family budgets.
"Of course hard-working families are seeing budgets squeezed," he said. "I think, in terms of what we are doing, there is legislation so that people are automatically put on to the lowest tariff.
"Of course you would expect the Government to always be looking at what more can be done to help hard-working families."
The spokesman said ministers were also encouraging competition in the energy market, and were taking action on living standards in a number of other areas such as rail fares and council tax.
"He really, really understands the pressure that families' budgets are under," he said.
The spokesman stressed that sustainable prosperity, with low mortgage rates, was what had the "fundamental impact" on living standards.
Mr Miliband told reporters: "SSE's announcement shows why we need an energy price freeze, not a Government frozen by inaction.
"The Government is letting the energy companies get away with it and letting down the British people.
"While this Government will stand up for the energy companies, I will stand up for consumers and businesses who need relief from rising energy prices.
"The companies are putting up prices because we've got a broken energy market and they are ripping off consumers.
"This latest scandal shows why the Government needs to act. The companies are trying to blame everyone else, the Government is trying to blame everyone else. They're responsible, they're not getting a grip. We would get a grip, we'd freeze prices, we'd reform a broken energy market."