SSE hits out after Bulb claims big energy firms are squeezing families | Business

A row has broken out between the UK’s second-biggest energy supplier and one of the largest challenger firms over whether small companies are pricing unsustainably or the big six are ripping people off.

The renewable energy supplier Bulb criticised the big six for pegging their default tariffs only £4 on average below the government’s price cap, saying they were treating the measure as a target rather than a limit.

The firm, which has grown rapidly since it entered the market in 2015 to more than 850,000 customers, accused the large players of “squeezing every last penny they can out of families”.

Unusually, SSE has hit back and suggested that smaller rivals are pricing at loss-making levels.

Stephen Forbes, the co-head of SSE Energy Services, said companies of differing scale had bunched just below the cap, and rightly so.

“It’s plain wrong to present this as a big-six issue. In total, 27 energy suppliers of all shapes and sizes have also set their prices within the same narrow range,” he said.

“The reason for this is the cap has been set at a level which does not fully reflect the true cost of providing energy to all customers.”

The default tariff offered by SSE is £4 under the cap of £1,337 based on typical energy use, compared with Bulb at £120 below.

SSE linked that low pricing to Bulb posting a £23.7m loss for the financial year 2017-18.

“That’s its choice and in a competitive market different companies will pursue different strategies, giving customers more options. Time will tell how sustainable these strategies are over the longer term,” Forbes said.

He added that “irresponsible” undercharging for energy took a toll on all households, pointing to the string of nine suppliers collapsing in the past year.

A Guardian analysis has found the failures will cost at least £80m spread across all energy billpayers, although challenger suppliers argue this is a small fraction of the amount customers pay over the odds for poor-value tariffs from the big six.

SSE also claimed that the big six label – a reference to British Gas, EDF, E.ON, npower, Scottish Power and SSE, which together control four-fifths of the market – was “past its sell-by date”.

Forbes pointed to customer service league tables, which put SSE and Bulb near the top, with big players languishing in the middle and minnows at the bottom. “There are brilliant large companies and there are terrible small companies, and vice versa,” he said.

A planned merger of SSE’s energy supply arm to npower was scrapped last year and the firm has made clear it wants to exit the retail market.

Dermot Nolan, the chief executive of energy regulator Ofgem, said last week that the string of small firms going bust “was to be expected” in a competitive market. However, he warned that wholesale costs had increased over the past year and a significant rise in the price cap is coming.

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Bulb said the big six were ripping customers off and contrasted its growth – from 200,000 to 850,000 customers last year – with SSE losing more than 1 million in the past four years.

Hayden Wood, the Bulb chief executive, said: “We disagree with the big six that their prices represent the true cost of energy. Our prices are more than £120 below the price cap but we still make a fair and sustainable profit of £50 from every member.

“We have chosen to reinvest this money in growing our business and signing up new members, something we’re unashamedly interested in doing. Every new Bulb member means a greener UK.”

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