Scottish and Southern Energy

Letter to Secretary of State for Energy and Climate Change - SSE giving customers a fair deal

Press Release   •   Nov 01, 2011 08:48 GMT

SSE has sent the following letter to Chris Huhne Secretary of State for Energy and Climate Change highlighting actions it is taking to provide a fairer deal for its customers and calling for further investigation into the perceived predatory pricing of other suppliers.

 

Dear Secretary of State,

GIVING CUSTOMERS A FAIR DEAL AND BRINGING AN END TO PREDATORY PRICING

In your speech on energy policy on 20 September you said that it is not fair that energy companies introduce ‘cut throat offers for new customers that stop small firms entering the market’.  You also said that looks like predatory pricing.

SSE strongly believes that it is up to energy companies to build the trust of their customers.  Earlier this month SSE announced a package of ten measures which are intended to address customers’ concerns about complexity, transparency and customer service.  These proposals are all being introduced over the next year or so.   

Following the Government’s energy summit last week I wanted to draw your attention to a specific decision SSE has made to address some of the issues that are being raised.

Ensuring all customers get a fair deal

SSE is delivering on its commitment to simplify tariffs and give customers confidence that they are getting the best possible deal. I can therefore confirm that SSE has decided to remove the price differential between its tariffs offered to those customers buying their energy online and those who are buying their energy through other channels.

As a result of this decision, all SSE customers will get the opportunity to access all of our prices regardless of whether they choose to deal with SSE over the phone, through a letter or online.  This will reduce customer confusion about where to find the best price with SSE.

Any customers on existing online only deals can remain on them if they choose to do so.

Calling for an end to ‘predatory pricing’

Your frustration at energy suppliers who appear to engage in predatory pricing is totally understandable.  The large price differentials between (often short-term) online and offline deals are prevalent amongst other major energy suppliers and are only made possible by the higher prices paid by existing, loyal customers.  At times the price difference offered by some major suppliers has been over £300.

SSE shares your view that treating customers in this way is not acceptable and reaffirms its commitment to never engage in any form of predatory pricing.  Our decision to remove online/offline price differentials emphasises the extent of our commitment to this vital principle.

The large price differences offered by other major suppliers cannot be justified on the grounds of cost alone.  They would therefore appear to be in breach of Ofgem’s rules.  SSE has again urged Ofgem to investigate this and I hope that you will continue to highlight this key issue until it is satisfactorily resolved.  It may be necessary for Ofgem to bring forward a licence condition to force all suppliers to equalise their online and offline prices and we would support this.

Building trust

I agree with Ofgem that in a period of rising energy prices, energy suppliers have to transform the way they deal with their consumers.  It is no longer acceptable for energy companies to offer significantly discounted products at the expense of one group of customers.  With the removal of any price differential between online and offline customers, SSE is making this a reality for our customers.

I hope that you welcome this decision and that we can continue working together to build customers’ trust in energy supply.

I am copying this letter to Alistair Buchanan at Ofgem.

Yours sincerely

Ian Marchant
Chief Executive