SSE promises lower bills if green tax scaled back

Energy giant SSE has piled more pressure on UK ministers to rethink their policy on “green taxes” by vowing to scale back its planned price hike if the controversial levies were overhauled.

While green taxes have helped to drive up bills, SSE said rising wholesale prices for gas were also a contributor

The pledge came as the Perth-based group, which trades as Scottish Hydro north of the Border, said its retail division had fallen into the red during the first half of the year because of higher wholesale gas prices, rising distribution costs and “government-sponsored social and environmental obligations”.

SSE was the first of the “big six” energy firms to announce a hike in prices this autumn, and the 8.2 per cent rise in average bills is due to kick in on Friday.

However, chief executive Alistair Phillips-Davies, who took over from previous boss Ian Marchant in July, said: “We would look to implement and pass on any cost reductions that we receive from government.”

Phillips-Davies said the levies – designed to help vulnerable customers install energy-saving measures – should be paid for by general taxation, which he said would reduce bills by £110.

Rivals EDF and Npower have made similar pledges to reduce their bills, while Co-operative Energy today scaled back a planned price increase to an average of 2 per cent, from 4.5 per cent previously, on growing expectations that green levies will be revamped.

Ann Robinson, director of consumer policy at price comparison website uSwitch, said George Osborne may use next month’s autumn statement to announce a review of the green taxes, potentially saving households £75 each.

She added: “While the government may be about to lend a helping hand, by potentially removing some of the extra levies that appear on our bills, this is unlikely to go far enough to really resolve the fundamental issues of affordability.

“Bills will still be creeping upwards and even more households will feel compelled to cut down on their energy usage as a result.”

Rising gas and electricity bills have dominated the political agenda in recent weeks after five of the “big six” suppliers upped tariffs. E.ON is the only major energy firm not to have shown its hand yet, but also pledged to pass on any savings to customers if green taxes are reduced.

SSE serves more than 9.4 million customers and today reported an 11.7 per cent slide in first-half profits as its retail arm slumped into the red.

As well as rising costs, the group blamed a fall in energy consumption during the summer as the division racked up an operating loss of £115.4m for the six months to the end of September, compared with a £48.3m profit a year earlier.

SSE chairman Lord Smith of Kelvin said energy market conditions “have been difficult for some time” but the group was hopeful that the current debate on prices, energy security and the environment will “lead to decisions that contribute to the long-term economic, social and environmental well-being of the UK and Ireland”.

He added: “For this reason, we will work constructively with politicians of all the major parties, and that is what we are doing.”

At a group level, adjusted pre-tax profits fell 11.7 per cent to £354m, but the interim dividend was raised 3.2 per cent to 26p a share and SSE said it was on track to deliver an inflation-busting increase in the full-year payout.