SSE’s Ian Marchant wants end to ‘interventionitis’

Outgoing SSE chief Ian Marchant has demanded an end to 'interventionitis'

Marchant warned that it was getting “frightfully difficult” to understand how the raft of incoming regulatory changes will affect the business he has led for the past decade.

The challenge for the team he leaves behind – headed by chief executive designate Alistair Phillips-Davies – is to “understand how all these plates move together”, he said.

Marchant told The Scotsman: “What I have been telling them is to keep the pressure on for answers, keep the pressure on for simple and understandable answers, but until you have those answers, don’t make any investment decisions.”

European Union directives are dictating the closure of older power plants that cannot be brought in line with pollution limits to help meet a 20 per cent reduction in greenhouse gas emissions by 2020.

At the same time, the Energy Bill making its way through Westminster will introduce new forms of subsidies along with the controversial “carbon price floor”, an escalating tax on energy-intensive users.

Tina Cook, utilities analyst with Charles Stanley, agreed that SSE and others would benefit from “some more clarity around the investment environment”.

“It is not particularly what they [SSE] are doing, it is just a challenging market,” she said. “But overall, it was a reassuring set of results with the figures in line with expectations.”

Marchant’s comments came as Perth-based SSE, one of the UK’s “big six” energy suppliers, posted a jump in profits as the cold winter pushed gas usage up 21 per cent and electricity use up by 5 per cent.

SSE’s retail division – which supplies some 9.5 million UK households under its Scottish Hydro, Southern Electric and Swalec brands – posted record profits of £410 million. That 28 per cent increase sparked anger among consumer groups, which accused SSE of profiteering from cash-strapped households.

The company’s power transmission business also put in a strong performance, with operating profits up nearly 19 per cent.

However, its wholesale generation division fell by 16 per cent as profits from gas-fired power plants proved “stubbornly low, if not negative”.

Overall pre-tax profits were 5.6 per cent higher at £1.41 billion despite a drop in revenues to £28.3bn, down from £31.7bn previously.

Following last month’s record £10.5m fine from Ofgem for “prolonged and extensive mis-selling” of contracts, SSE chairman Lord Smith re-iterated the company’s previous apologies for misleading customers about prices and savings that could be made by switching.

“While the breaches were wrong, the response has clearly been right,” Smith said.

Executive bonuses were cut by 40 per cent in the wake of the scandal, despite calls from some that they be scrapped altogether. Marchant waived his bonus of £329,000, but leaves the company at the end of next month with a £10.4m pension pot worth £420,000 annually from the age of 60.

The company has proposed a final dividend of 59p to be paid on 27 September, making a total of 84.2p for the year, an increase of 5.1 per cent.