UK Energy
Savings

ScottishPower is to increase its domestic gas and electricity prices from 6th December 2013 following rises in forward wholesale energy costs, increased energy delivery charges and increased costs to support compulsory social and environmental schemes.  Dual fuel prices will increase by an average of 8.6%[1] . Gas prices will increase by an average of 8.5% and electricity prices by an average of 9.0%[1].

If you are a ScottishPower customer affected by this price increase see how much you could save by switching your energy to a new supplier

The average annual dual fuel bill for a customer will increase by £113[1].  This is primarily driven by:

• 7%[2]  increase in the costs of the gas and electricity purchased on wholesale markets
• 11%[3] increase in the costs of delivering gas and electricity to our customers’ homes
  
• 16%[4] increase in the costs of compulsory environmental and social schemes

All these costs have had a significant financial impact as shown in the Group’s financial results for the first nine months of 2013 presented yesterday, which detailed an operating loss of £23 million for ScottishPower’s combined Retail and Generation activities in the UK. At the same time, ScottishPower has more than doubled its annual investment programme from £600million in 2006 to £1.3billion this year while continuing to be a strong payer of taxes with £2billion paid since 2007[5].

Neil Clitheroe, ScottishPower’s CEO of Energy Retail and Generation, said “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.”

ScottishPower is also simplifying its pricing structure and reducing the number of different tariffs it offers in line with Ofgem’s Retail Market Review reforms, including:

• “No Standing Charge” standard prices will be moved to “Standing Charge” standard prices
  
• Discounts will be simplified with the prompt payment discount removed

From next year, social tariffs will soon no longer be supported by the Government’s Warm Home Discount scheme.  ScottishPower is the last of the major energy companies to remove this type of tariff.  However, we are taking steps to assist these customers by delaying any price increase for our Fresh Start social tariff until 1st March 2014 – helping these customers through the winter period.  From 1st March these customers will be moved to standard prices for their payment method.

ScottishPower will shortly commence writing to 2.2 million affected customers, with personalised information explaining their prices.  More than 1 million customers on capped or fixed products will not be affected.

Notes

[1] Based on a weighted average of impacted ScottishPower customers across all payment types, averaged across Great Britain, based on the current Ofgem typical annual consumption values (gas usage of 16,500kWh and standard rate electricity usage of 3,300kWh) and standard prices.  Excludes impact of removal of prompt payment discounts. Includes VAT at the current applicable rate of 5%.

[2] Average percentage based on the expected energy cost as purchased for the 12 months of 2013 compared to the 12 months of 2012 - based on the new 1st January 2014 Ofgem typical annual consumption values (gas usage of 13,500kWh and standard rate electricity usage of 3,200kWh).

[3] Average percentage based on the increased charges published by the electricity and gas network operators for the year commencing April 2013 compared to the year commencing April 2012 - based on the new 1st January 2014 Ofgem typical annual consumption values (gas usage of 13,500kWh and standard rate electricity usage of 3,200kWh).

[4] Average percentage based on our estimated cost of environmental and social obligations for the 12 months of 2013 compared to 12 months of 2012 - based on the new 1st January 2014 Ofgem typical annual consumption values (gas usage of 13,500kWh and standard rate electricity usage of 3,200kWh).

[5] Since 2007,  ScottishPower has paid £2billion in taxes – over £1billion in Corporation tax and a further £1billion in business rates, national insurance contributions and collected employment and environmental taxes.