SSE profits to rise after energy price hike

The energy company is likely to attract the ire of politicians and customers as it says it'll whack up its dividend.

by Rachel Savage
Last Updated: 24 Jul 2014

SSE, one of the ‘Big Six’ British energy companies, has said it expects its profits to climb 8.8% this year, after raising household energy bills 8.2% in November. Just when you thought those big bad energy companies had gone quiet, they come back with an electric bang to fuel the fury of cash-strapped consumers.

SSE, which has increased its adjusted profits and dividend every year since it was formed in 1998, said it expected adjusted pre-tax profit to rise to £1.54bn, the average of analyst forecasts. The energy giant also said it plans to up its full year dividend by 3%.

Customers are likely to be pretty peeved with SSE, given that it was the first of the ‘Big Six’ to announce a price-rise (claiming at the time that rising costs gave it no alternative), and will be the last to pass on a 3.5% price cut (on March 24) from a government reduction of so-called ‘green levies’.

Chief exec Alistair Phillips-Davies is obviously aware of this, and has embarked on a charm offensive. ‘I'm very encouraged that this is a financial year in which the concerns of bill-payers have been put at the heart of the debate about how to meet the country's energy needs,’ he said in a statement.

Reducing the green levies was, clearly, a great idea, Phillips-Davies said, but ‘there is still more to be done to achieve what we have argued for some time is the fairest, most progressive solution - which is to shift the full cost burden of environmental and social policies from the energy bill payer to the taxpayer.’ Translation: the government should tax people directly so we don’t look so bad.

SSE said it had lost 250,000 customers in the last 9 months, as people switched to its big rivals or smaller energy companies, although 9.22 million is still a hefty share of the energy market.

Moreover, a lot of people have tried to cut their costs instead of switching companies – average electricity consumption by SSE’s household customers fell 4.3%, while gas was down 9.5%.

SSE also said it was reviewing its offshore wind projects after two large wind farms were not granted government subsidies, and predicted that investment would fall from the £1.5bn-£1.7bn it has spent per year since 2010.

Looks like SSE has decided it’s not going to take all the political ‘cost of living’ criticism lying down and is doing its best to keep investors sweet. Whether customers will take the same view remains to be seen…

Tags:
Energy

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