SSE, one of the big six energy suppliers have today announced that they will be freezing prices for all of their customers until 2016. The freeze covers both gas and electricity prices and will be a welcome relief to many households who have been anxious about the energy companies' recent price increases. SSE were the first of the big six to put up their prices at the end of 2013 and this recent move has been met with open arms from energy regulators and watchdogs. But what's behind all this?
Either this is SSE trying to show some consumer compassion and take steps to rebuild their reputation gradually, or they're now convinced that Labour may be elected in 2015 and with them a national price freeze anyway - getting ahead of the curve could pocket them some extra customers in the meantime and help win back customer confidence. In order to stick to their current prices despite potential rising wholesale costs and other influences such as carbon tax and green levies, the business will streamline its operations. As part of the streamlining process, SSE have announced that they will be cutting 500 jobs and shelving future plans for wind farm development. These steps are estimated to save SSE nearly £100m in operating profit in the next year.
Many in the energy industry have criticised SSE's move, expressing a rather cynical outlook on the motives behind it. If Ed Miliband does get voted in and his price freeze goes ahead, SSE have lost nothing and have perhaps gained some customers in the meantime. Also, while the news about their price freeze occupies the headlines, their cancelling of four potentially lucrative wind farms and cutting of 500 jobs are mere footnotes. Could it be that this generous and benevolent price freeze is actually a ruse to streamline their company without drawing too much attention? Regardless, watchdogs are content with the changes and they will be welcomed by their thousands of customers throughout the UK.
Ed Davey, the UK energy secretary, was also behind the move, saying, "This shows that the big six are starting to realise they need to take big action if they want to keep their customers, who have been switching suppliers in record numbers. 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."
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