PRESSURE was mounting on the country’s energy suppliers last night after supplier SSE announced it would freeze household gas and electricity bills until January 2016.
Just six months ago the firm had criticised a pledge by Labour to force suppliers to freeze prices, saying it would lead to “unsustainable loss-making retail businesses”.
However yesterday SSE chief executive Alistair Phillips-Davies said that his firm needed to make a “bold statement” to let customers know it was heading their concerns, but warned the freeze would knock £100m off profits for 2015.
Bosses also revealed that the group is to axe 500 jobs in a voluntary redundancy programme as part of a cost-cutting drive to save £100m a year.
The energy sector currently faces intense criticism after a succession of above inflation rises and a will find out if it is to face a regulatory probe within the next few days.
Early indications are that a full-scale two-year competition investigation will follow.
Mr Phillips-Davies said: “We felt we needed to make a bold statement. It’s all about making sure that we listen to customers, that we show that we are responsive to customers and so we have clearly said we will have to accept lower profits.”
It comes amid intense political lobbying on energy companies over rising bills and soaring profits at a time when household wages are being squeezed.
Energy Secretary Ed Davey welcomed its apparent U-turn and put pressure on the company’s rivals to do the same.
He said: “SSE have shown today that the big energy firms are able to cut their costs and profits, and be confident about their ability to weather potential uncertainty in the wholesale markets, to give bill payers long-term price security.
“Customers of the others will be asking whether their suppliers will do the same. The Government encourages people to shop around for the best deal.”
Will Morris, managing director of the group’s retail arm, said supply profit margins would fall from their usual level of around five per cent to as low as 2.5 per cent.
The price freeze announcement knocked two per cent off the value of British Gas owner Centrica as it is likely to come under renewed pressure over bills.
But SSE shares were up amid its disclosure of wider plans for the group’s future, including a pledge on higher dividends.
SSE, which supplies more than nine million customers in Great Britain and Ireland, said the freeze would see the longest unconditional price guarantee the domestic energy market has seen.
The group said that by January 2016 it will not have increased prices since November 2013, a period of almost 26 months.
However this comes amid the backdrop of an inflation-busting 8.2 per cent increase November of last year, a rise in blamed on higher costs of buying and distributing wholesale energy as well as Government levies on bills to pay for energy efficiency policies.
SSE, which also trades as Scottish Hydro, Southern Electric, SWALEC and Atlantic, is one of the so-called Big Six energy companies that dominate UK supply, together with British Gas, E.ON, npower, EDF and Scottish Power.
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