Energy giant warns of higher bills despite profits rising a third

Published on Wednesday 11 November 2009 21:47

ONE of the UK's leading energy suppliers warned it may have to hike prices next year, despite announcing a sharp increase in profits yesterday.

Profits at Scottish & Southern Energy (SSE) which owns Southern Electric, Swalec and Scottish Hydro Electric, have increased by 36 per cent from 302.6 million to 410.5m over the past year.

But the company insisted that it would still have to consider a rise in prices for consumers next year.

The company said its main gas supply business traded at a loss in the half-year, while higher wholesale prices and rising distribution and environmental costs were adding to pressure on the business.

SSE said the performance in the six months was consistent with its overall goal of a "moderate, single-digit increase" in profits for the full year.

The firm, which has more than nine million electricity and gas accounts, said its main gas supply business traded at a loss in the half-year, while higher forward annual wholesale prices and rising distribution and environmental costs were adding to pressure on the business.

It said: "While SSE would like to follow the reduction in energy prices it implemented in March with a further reduction if it were possible, it is not able to commit to do so. It remains committed, however, to ensuring its prices and, more importantly, bills, are as low as possible over the medium term."

Last night, campaigners and politicians said vulnerable people would be put at risk by a price increase.

Douglas McLellan, policy adviser for Age Concern and Help the Aged in Scotland, said: "We are shocked at this announcement by SSE. It's disappointing that a firm would seek to endanger the lives of older people by increasing the price of electricity while making profits.

"In Scotland, a total of 3,140 older people died over last winter (2008-9] compared to 2050 the year before – that's almost a third more in the over-75 and 85 group. A lot of this is a direct impact of how warm or cold they are in the home.

"Many winter deaths are a result of pneumonia or poor circulation, which is not caused by the cold on a journey to the shops, but from the level of heat or otherwise they can afford."

Duncan McNeil, Labour MSP and convener of the local government committee, said: "I am deeply disappointed that SSE is warning of an increase in fuel bills when they made a profit of over 400m last year.

"SSE should remember that there were 3,140 winter deaths last year and the people who will suffer most from higher bills are the old and vulnerable. The Scottish Government also need to take action."

Ann Robinson, director of consumer policy at price comparison website uSwitch.com, said: "Energy companies have enjoyed a long period of low wholesale prices – these results give a clear indication of the beneficial impact it is having on their bottom lines.

"A 36 per cent increase in half-year profits suggests plenty of scope for a further price cut."

Trisha McAuley, interim director, Consumer Focus Scotland, said: "Consumers rightly expect to gain from the fall in wholesale energy costs and energy suppliers need to explain why, as their profits go up, household bills are still not coming down."