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SSE under fire over electricity prices

ELECTRICITY consumers in Shetland will “find it difficult” to understand why their bills are not coming down following a huge crash in oil prices over the past six months, isles MSP Tavish Scott says.

On Monday, SSE announced it would cut its gas prices by 4.1 per cent from 30 April, but is maintaining a freeze on electricity prices until July 2016. That is despite the price of a barrel of oil plummeting from over $100 a barrel to less than $50 dollars a barrel since last summer.

Its gas price cut is along similar lines to those announced by other energy providers, who are also refusing to reduce their electricity prices. There has also been criticism that even the modest reduction in gas prices has been delayed until the winter is over.

The high cost of energy – with the Highlands and Islands facing a higher tariff in addition to harsher weather – is cited as a leading cause of fuel poverty, which is estimated to affect more than 40 per cent of isles households.

SSE – which trades under various brands including Scottish Hydro Electric – and other firms have previously argued that gas and electricity prices are closely linked. But on Monday an SSE spokesman said: “They are very different with different underlying costs.”

Back in 2008, for instance, amid soaring oil prices SSE announced a 29 per cent hike in gas prices and a 19 per cent hike in electricity prices. In August that year the company claimed the increases were related to a surge in wholesale prices for oil and gas between February and July.

Now, the energy firm claims that it “takes longer for wholesale costs to filer through than other products like petrol as we buy much further in advance to smooth out the rise and falls in wholesale prices”.

SSE claims it has bought wholesale gas up to two years in advance – which would appear to contradict previous statements made at the time of announcing price rises immediately after wholesale costs had risen.

Scott said: “Shetland consumers will find it difficult to understand why all prices are not coming down. Oil prices have fallen by more than a half in the last six months.

“BP believe that current crude oil prices could be the norm for three years. So energy companies must accept that they have to reflect this position in the prices we all pay to keep the lights on.”

He added: “The energy regulatory body Ofgem must be looking very closely at the prices consumers pay and take action to help.”