SSE announces half year profits of nearly £400m after nine per cent price hikes
GAS AND electricity giant SSE has announced half year profits of £397.5 million after saying it had no choice but to increase prices to consumers by nine per cent.
• Perth-based SSE said increased wholesale prices behind the increase in charges to consumers
• SSE has pledged not to raise prices again until at least the second half of 2013
• SSE spokesman said that the firm is ‘entirely confident that its Energy Portfolio Management team operates in a fair and legitimate way’
The Perth based company said increased wholesale prices were behind the increase in charges to consumers.
And it strongly denied reports from a whistleblower which suggested traders from the big six energy companies were manipulating wholesale prices in order to justify increasing prices.
SSE increased its gas and electricty prices on October 15 by nine per cent or £119 a year, affecting 8.4 million customers and pushing the average dual fuel bill from £1,235 to £1,354 a year.
The average household energy bill for an SSE customer was £1.094 in January 2011, today it is £1,354 or £260 or 24 per cent higher.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: “Consumers will be bitterly disappointed to see profits soaring so shortly after being asked to swallow a nine per cent price hike. And while SSE has pledged not to increase its prices again until at least the second half of 2013, whether this will be enough to satisfy customers in the face of these headline profits remains to be seen.
“The impact of higher energy prices on consumers is clear. This winter almost nine in ten households (87 per cent) will be rationing their energy use, while last winter three quarters of households (75 per cent) - potentially 19.5 million – went without heating at some point to keep energy costs down. Worryingly, 15 per cent said it had affected their quality of life or health and the danger is that, as higher prices hit this winter, many more may be forced to compromise on their health and well-being in this way.”
A spokesman for SSE said the rise in profits reflected the whole business and not just energy retail. He said the profits made by the domestic retail arm of the business had risen by 1.5 per cent and that the apparent increase in profits corrected a £100m loss in the domestic retail market the year before.
In a statement Lord Smith of Kelvin, Chairman of SSE, said:“While some observers may choose to criticise SSE for making a profit and paying a dividend, believe that profit and dividend allow SSE to employ people, pay tax, provide services that customers need, make investments that keep the lights on and create jobs, while providing an income return that shareholders like pension funds need.”
The company says increases in the wholesale price of gas are one of the factors in price rises to consumers and has strongly denied reports of wholesale price fixing which are currently being investigated by the Financial Services Agency.
A spokesman said: “SSE is entirely confident that its Energy Portfolio Management team operates in a fair and legitimate way, and SSE maintains a framework and culture of compliance through training, systems, controls and governance. All individuals involved undergo regular training and competence assessments to reinforce this culture and framework, with the objective of ensuring high standards of market conduct and behaviour, and there are no inappropriate personal economic incentives for them.
“SSE reviews and monitors continuously its participation in wholesale energy markets, and continues to do so, and will naturally share all required and relevant information with the FSA and Ofgem in a constructive and open way. SSE will support strongly any efforts by the FSA and Ofgem to deal robustly with any activity by any market participant which is proved to be wrong and to have resulted in any detriment, including to customers.”
Labour Shadow Energy Minister, Rutherglen and Hamilton West MP Tom Greatrex said there was an urgent need for reform in the energy market: “People will not understand how the energy giants can get away with inflation-busting price rises this winter when their profits are already increasing.
“In the wake of the allegations this week about price fixing in the electricity and gas markets, the time has come for a complete overhaul of our energy market. We need a One Nation government to break the dominance of the energy giants, open up the energy market, protect vulnerable customers from being ripped off and create a tough new energy regulator with the power to force energy companies to pass on savings to consumers.”