Power giant SSE ponders ‘future options’ for retail supply arm

Perth-based utility giant SSE has said it is continuing to work on “future options” for its retail supply arm after the collapse of its merger with Npower last year.

The group is a major supplier of renewable power. Picture: Ian Rutherford

The firm is looking at potential “external collateral arrangements” for a future of the division outside the SSE Group.

But it said if these options are not workable, it will look to keep the division as a separate business within the wider group. It plans to report back on its preferred option by the end of May.

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In a full-year trading update, the group confirmed its household supply business is set to see profit margins more than halve as a result of the default tariff price cap.

Retail margins are set to fall to 2 per cent to 3 per cent in the year to 31 March from 6.8 per cent in 2017-18.

But it said the wider SSE Energy Services division is set to be profitable in 2018-19 and the following year despite the margin hit.

SSE said in its previous trading update it was considering a standalone demerger and listing, a sale, or ring-fencing of its energy services arm.

It comes after SSE and Npower were last year forced to call off their plans to merge the unit, blaming “challenging market conditions” and the UK government’s price cap.

SSE finance director Gregor Alexander said: “This year has clearly presented significant challenges and uncertainty in the operating environment persists, but our optionality and agility mean we are well placed to deliver on the strategy we presented last year to create value for shareholders and society from developing, owning and operating energy and related infrastructure in a sustainable way, as well as delivering against our five-year dividend plan.”