Not the first supplier, nor the last, to increase prices due to Covid…
SSE announce that customers on their standard Choice contract will be receiving notice this week advising them of the unfortunate arrival of temporary minor mid-contract price increases at 0.201 p/kWh.
This is a temporary minor measure, and one the supplier is forced to implement due to unprecedented price increases in non-commodity costs caused by implications of COVID lockdowns.
SSE are not the first, nor will they be the last to announce such a step. Lock down has resulted in a steep reduction in national electricity consumption, which in turn caused steep and unpredicted increases in terms of p/kWh for non-commodity costs. Non-commodity costs account for around two thirds of a typical bill, so it is not possible for SSE to shield the customer entirely from this scenario.
We have already witnessed the demise of many suppliers due to poor performance this year, and as the impacts of COVID ripple through UK energy suppliers we will un-doubtable see more suppliers fold, or be taken over. Other suppliers will issue mid-contract price increases to avoid financial ruin.
SSE is still one of the most professional suppliers in the market. Direct Power has worked with them for close to twenty years, and historically SSE has not been quick to increase prices mid-contract when other suppliers have. COVID has ravaged small and large businesses, and major energy suppliers are not immune to the impact and strain of COVID. The mid-contract increase has been kept to a fair and reasonable level. It is preferable to remain with a viable supplier, in spite of a minor mid-contract price increase, than have your supplier fold and your account go onto expensive out of contract rates with a supplier of last resort, and then have to secure a new contract whilst market prices are higher.
SSE take this step reluctantly, rest assured, if you are on contract with SSE, you will continue to receive their good customer service.
All SSE customers impacted by this temporary increase will receive communication directly from the supplier.
Read below to learn what SSE will relay to their impacted clients:
For customers whose electricity contract with SSE Business Energy is on our standard Choice contract, energy costs are fixed but the non-commodity costs can change in line with third party charges – like government levies and transporting electricity through the different networks. More than half of the average electricity bill for business customers is made up of non-commodity charges.
We do everything we can to shelter our customers from non-commodity cost fluctuations, but the unprecedented circumstances of Britain’s lockdown due to Covid-19 have led to significantly lower demand for electricity across the country. Unfortunately, the lower national energy demand is increasing the non-commodity charge per unit (p/kWh) of electricity used and so we need to temporarily increase the rate Choice customers pay.
To minimise the impact of these unforeseen costs which are outside our control, we’re only increasing the rate to reflect part of the non-commodity charges affected in 2020/21.
Choice customers’ billed rate will increase by 0.201p/kWh from 1 December 2020 (or the bill that spans this date) for a nine-month period. Their rate will revert to their original contracted price from September 2021. There will be no change to the standing charge they pay.
All other terms and conditions remain unaffected. You can view a copy of our terms and conditions HERE.
We’re writing to Choice customers this month to tell them about this rate increase, and you can see a copy of the letter HERE.
To help answer any questions you may have, we’ve put together an FAQ with all available information – you can find key points below and full FAQs HERE.
When will this take effect?
For quarterly billed Choice customers, the rate increase will be applied from 1 December 2020, for a nine-month period until 31 August 2021.
For monthly billed Choice customers, the rate increase will be applied from the whole billing month that contains the date 1 December 2020. For example, if they’re billed on 15th of month to 14th of next month then the rate increase will be applied on 15 November as this billing cycle contains 1 December. Then it will revert to their original contracted rate after 31 August 2021 or the bill that spans this date.
We will not re-bill customers for the non-commodity cost increase, and bills won’t refer to previous consumption. Instead, it will be applied as a forward charge on future consumption, through the temporary rate increase.
Which non-commodity costs are increasing?
Many of the non-commodity charges that make up a customer’s bill have increased for the 2020/21 financial year, including government levies and the costs of balancing the system. The costs most impacted and included in this rate increase are Balancing Services Use of System (BSUoS), Capacity Mechanism (CM) and Feed in Tariff (FiT). Other non-commodity costs have also increased – such as Contracts for Difference (CfD) – however, we’re not passing on all the additional costs.
At this point we’re only passing on non-commodity costs related to the volume of electricity consumed in 2020/21. This temporary increase is a set amount per kWh and spread over a nine-month period to cover 2020/21.
Our non-commodity cost forecasts have also increased for future years, which a customer’s contract may span into. Although we’ll do our best to avoid any price increases, we reserve the right to pass on non-commodity costs related to the volume of electricity consumed in 2021/22 and beyond.
What can customers do to avoid this change? Can they terminate their contract with SSE Business Energy?
Because they chose a Choice contract, their non-commodity charges are not fixed for the contract duration. Their contract terms and conditions state that we are entitled to charge them for costs applied by their distributor and/or to reflect any variation in our costs in supply of electricity which is not within our reasonable control. This includes passing on a rise in non-commodity charges as these are costs, we incur from third parties in supplying electricity and which we cannot control.
These unforeseen costs apply across Britain’s energy supply. The exceptional circumstances of Covid-19 have had a material impact on these costs and we need to pass on these cost increases. Unfortunately, it’s not possible to avoid this increase. As Choice customers are subject to a fixed term contract with no ability to terminate, their contract end date will remain as stated when they agreed their contract.
What’s the likely impact on bills?
Each of our customers uses energy differently, and this charge will be applied based on consumption. As an example, a business that consumes 20,000 kWh electricity in a year would see an additional £30 on bills in total over the nine-month period.
To help make sure bills are accurate, please submit meter readings monthly. You or customers can do this HERE.
You can read our full FAQs HERE.