SSE pledges to freeze energy prices until 2016

The Big Six supplier is throwing down the gauntlet to rivals with the promise to not raise prices for two winters.

SSE has pledged to freeze its gas and electricity prices until January 2016.

The price guarantee applies to all SSE, Scottish Hydro, Southern Electric, SWALEC and Atlantic domestic customers in the UK who are on or who move to the Standard tariff between 26th March 2014 and 1st January 2016.

SSE plans to deliver its price guarantee by reducing its business costs by around £100 million. This will involve cutting 500 jobs and shelving some offshore wind farm developments.

The firm has also declared the intention to be more transparent, outlining a plan to separate its Retail and Wholesale business by March 2015, making performance of these two different strands easier to understand.

How it compares

SSE’s Standard tariff costs on average £1,186 a year.

The deal is the fourth cheapest compared to the other ‘Big Six’ suppliers standard tariffs as the table below shows.

Source: Energyhelpline 26/03/2014

All calculations are for an average usage dual fuel household paying by monthly direct debit. Average usage as defined by OFGEM is 13,500 kWh pa of gas and 3,200 kWh pa of electricity

However, SSE is the only Big Six supplier offering to freeze the cost of its Standard tariff, eliminating the company from the annual round of price hikes we've come to expect from all the big suppliers for at least two winters.

Last year all six big energy companies hiked their energy prices, which meant those on standard tariffs saw their bills increase, while those on fixed rate deals were shielded.

The suppliers all blamed Government green levies for the hikes, but when these were reduced they all had to revise their price changes. See Energy price rises and cuts in full for more.

SSE was the last supplier to pass on the levy cuts on 24th March and reduce bills. And now it's the first of supplier to freeze prices – throwing down the gauntlet to its Big Six rivals.

In addition, SSE is calling for a longer term solution to energy prices and has written to politicians asking for energy taxes to be lifted out of energy bills and grouped with general taxation instead. The supplier believes that as well as reducing bills the move could help protect those less able to pay.

Alistair Phillips-Davies, Chief Executive of SSE, said he hoped the measures announced today would show that “SSE is not part of the problem but part of the solution.”

To find the best deal for your household compare tariffs with lovemoney.com

The problem with standard tariffs

An energy supplier’s standard tariff is normally the most expensive one it offers.

Customers usually revert onto a standard tariff when the initial fixed or variable deal ends.

Despite the relative poor value, it is estimated around 70% of UK households are on a standard tariff and are wasting around £2 billion a year.

So while SSE's pledge is important, you can save more by opting for a fixed rate deal. Below are the cheapest two-year or more fixed rate energy deals.

Source: Energyhelpline 26/03/2014

All calculations are for an average usage dual fuel household paying by monthly direct debit. Average usage as defined by OFGEM is 13,500 kWh pa of gas and 3,200 kWh pa of electricity

You can save £95 a year with the Ovo Cheaper Energy (Fixed to June 2016) deal compared to SSE’s Standard tariff.

In fact you can get better value from SSE's Fixed Price March 17 which has the same annual cost as its Standard tariff but lasts 13 months longer!

The cheapest fixed rate deal at the moment comes from First Utilty with its iSave Fixed v18, which will fix gas and electricity prices until 31st May 2015. It's a shorter fix compared to the table above but will cost an average of £1,013 a year. That's a saving of £173 a year compared to SSE's Standard deal.

To find the best deal for your household compare tariffs with lovemoney.com

More on energy:

Ten ways to save on energy

The alternatives to the Big Six energy providers

First Utility launches cheapest energy deal on the market