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SSE Price Rise Reignites Political Spat Over U.K. Energy Policy

SSE Plc (SSE)’s decision to raise U.K. household energy prices by an inflation-busting average 8.2 percent reignited a political dispute over the cost of living and the extent of government intervention in the market.

SSE, one of the Big Six energy suppliers that dominate the U.K. market, said in a Regulatory News Service statement today it will increase gas and electricity prices on Nov. 15 after six months of losses in its retail arm. It cited higher energy costs in global markets, supply charges and government levies. The increase will affect 4.4 million electricity customers and 2.9 million gas clients, putting up bills for a typical dual-fuel consumer by about 2 pounds ($3.20) a week, SSE said.

The increase by SSE, which trades as brands including Southern Electric and Swalec, is more than three times the level of inflation and eight times faster than average income growth. U.K. consumer prices rose 2.7 percent in August from a year earlier while average wages increased by only an annual 1 percent in the three months through July.

While Conservative Energy Minister Michael Fallon urged consumers to consider switching to one of the company’s competitors, telling ITV’s “Daybreak” program that “the best answer here is more competition,” the opposition Labour Party repeated its pledge to freeze prices if it wins power in the 2015 general election.

“When times are tough, energy companies should be helping their customers, not hitting them with more price rises to boost their profits,” Labour’s energy spokeswoman, Caroline Flint, said in an e-mailed statement. “That’s why a Labour government would freeze energy prices and reset Britain’s energy market to stop people being ripped off.”

Policy Differences

Labour’s plan to cap energy prices until the start of 2017 represents the starkest dividing line yet with Prime Minister David Cameron’s Conservatives, as the cost of living comes to the fore as an election issue. Cameron’s government is seeking a more competitive market to drive down prices, and its Energy Bill going through Parliament gives ministers some powers to force companies to move some customers onto less costly tariffs.

The prime minister’s weekly question-and-answer session in the House of Commons yesterday was dominated by energy policy. Cameron said Labour’s plans would amount to a “broken promise” because international wholesale gas prices would mean the U.K. could not act unilaterally. He accused Miliband of being ideologically committed to “tribal socialism.”

Miliband, who is trying to portray Cameron as out of touch with the concerns of ordinary voters, accused the premier of “floundering around” and standing up “for the wrong people.”

To contact the reporter on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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