Energy giant hints at price rise despite £2.1bn profit

FEARS were raised yesterday that millions of customers of utility giant Scottish & Southern Energy could be hit by another hike in gas and electricity prices.

The concerns came after the Perth-based company reported a 29 per cent rise in pre-tax profits to 2.1 billion, despite a drop in power use among its 9.16 million customers.

The company warned that wholesale gas and electricity prices had risen by 25 per cent, far higher this year than it had increased its customers' bills, fuelling fears that another price hike is in the pipeline, despite claims by SSE that there are no plans for a price increase.

Earlier this month Centrica, the energy giant that owns British Gas, warned that its customers might have to pay more for their energy, saying "end-user prices" did not reflect the price the company was having to pay in the wholesale gas market.

Andrew Faulk, the energy expert at Consumer Focus Scotland, said last night: "Hard-pressed consumers will be grinding their teeth in frustration as the second of the Big Six hints at price rises while reporting increased profits. Customers simply don't have faith that they are being asked to pay a fair price and Ofgem has shown this lack of trust has firm foundations."

He added: "As suppliers move to put up prices the regulator Ofgem faces its first major test since its market review. If it isn't satisfied that price rises are fair, and that suppliers are making the changes on transparency and service needed, the threat of a Competition Commission inquiry must become a reality."

Richard Lloyd, executive director of Which?, the consumer watchdog, also voiced his concern. He said: "Customers already struggling with rising energy costs and increasing inflation will find today's announcement difficult to swallow.

"Once again, it appears that a Big Six energy company is putting its shareholders ahead of its customers. People are fed up with energy companies insisting they have to increase prices, while announcing bumper profits."

And a spokesman for energyhelpline.com said: "This increases fears of steep price rises being passed onto customers in the coming months."

He added: "The cheapest gas and electricity tariff, British Gas Websaver 11, has been replaced by Websaver 12, which is 60 more expensive. This is further proof that suppliers are feeling the pressure of rising wholesale prices."

SSE announced a 9.4 per cent rise in gas prices at the beginning of December last year. A spokesman for the company said yesterday: "We have not said we are putting prices up. We are just going to be monitoring the market."Announcing its full-year results, SSE said the profits increase had been helped by changes in electricity distribution prices following a regulatory review, offsetting higher-than-forecast wholesale gas prices and disappointing output from renewable energy and hydro-electric schemes. Electricity consumption by households fell by 2.5 per cent, it added.

SSE said that since announcing a December rise in household gas prices, annual wholesale prices for electricity and gas had risen by about one quarter and one third respectively.

The company raised its dividend to shareholders by 7.1 per cent to 75p a share, in line with plans announced last year to increase the pay-out by at least 2 percentage points above inflation for the subsequent three years. The company's report said: "SSE has delivered sector-leading service to energy customers and maintained a strong record of reliability in energy networks."