Fresh blow as energy prices rise

Hard-pressed consumers were dealt a fresh blow tonight after Scottish Power unleashed what is expected to be a new wave of energy bill rises.

The company said gas tariffs will rise by an average of 19% from August 1, with electricity going up by 10% on the same date. The increases, which will impact on 2.4 million households, is expected to add £173 to the average annual dual fuel bill.

Other suppliers are certain to follow suit in the wake of a sustained rise in wholesale supply costs, which Scottish Power said had jumped 30% since it last increased gas and electricity bills in November.

Consumer Focus described the latest rise as a body blow for UK households and said it will further undermine public trust in energy companies.

Audrey Gallacher, the watchdog's head of energy, said: "Companies have been softening customers up for price rises for months but customers will shocked at the scale of this rise.

"We know suppliers like the comfort of the pack and that price rises come in waves. Every household in the country will now be bracing themselves for impact."

Energy regulator Ofgem recently called for the industry to be overhauled after it found that the "big six" companies had put up prices more quickly than they reduced them when costs fell.

It accused them of "failing to play it straight" with consumers and threatened to refer them to the Competition Commission if they failed to simplify prices. It also called for them to sell off between 10% and 20% of their electricity output to allow smaller firms to enter the market.

Ofgem has also ordered energy companies to give its customers a minimum of 30 days' notice before putting bills up.

A separate inquiry has been launched into Scottish Power's pricing plans.

The latest price rises will cause more misery for cash-strapped households, which are struggling as wages fail to keep pace with rising inflation.

All of the big six companies hiked prices over the winter and the Bank of England has already said it expects fuel bills to rise by as much as 15% this year. British Gas owner Centrica recently signalled that price rises are on the way.

Scottish Power's tariff hikes mean that a dual fuel customer paying by direct debit will see prices rise by £173 to £1,206. Customers paying by cash on a quarterly basis will see their annual bill rise by £180 to £1,391.

Raymond Jack, Scottish Power's UK retail director, said: "Wholesale prices for gas and electricity have increased significantly since the end of last year and continuing unrest in global energy markets means future prices are volatile.

"We understand times are difficult for many people, and we have done what we can to absorb these additional costs for as long as possible to minimise the impact on our customers."

Scottish Power, which is part of Spain's Iberdrola, said some 700,000 of its customers will be protected from the price rises through capped or fixed price deals.

It also today launched an online product with a long fixed-price offer that it claims is one of the cheapest in the market and said it could help its customers to reduce their fuel bills by making energy efficiency savings in their homes.