Comment: SSE caps prices | Santander

Martin Flanagan

THE pledge by SSE chief executive Alistair Phillips-Davies to freeze household gas and electricity prices for two years is a stunning U-turn for the Perth-based energy company.

Having criticised Labour’s pledge to force suppliers to do just that six months ago, it obviously ramps up the pressure on SSE’s rivals to do something similar.

And, if not, why not?

In addition, SSE is to flog off assets worth £1 billion to make itself a smaller, more streamlined company, while it is shelving the construction of two onshore wind farms that it says are no longer viable.

With the momentum in overdrive, SSE says it is to legally separate its wholesale energy production arm from its retail division to increase transparency, while also announcing 500 redundancies as part of a cost-cutting drive to save £100 million a year.

Taken together, it constitutes an eye-catching burst of energy in every sense.

Two of the pledges could be seen as keenly anticipatory of the way the regulatory wind is blowing, with SSE perhaps deciding to gain political brownie points by moving first rather than being seen as reluctant and defensive.

If Labour wins the UK general election and brings in its own big six price freeze, SSE would suffer it anyway, so why not get some pleasing public relations out of being proactive and crank up the pressure on rivals?

It is bound to hit SSE’s margins, and the low key Phillips-Davies, who succeeded the bullish Ian Marchant last year, reckons it will cost the company £100m of profit in 2015.

But it is clear that the company now believes it is a case of “needs must” in the current political climate.

Similarly, separating wholesale from retail operations could forestall Energy Secretary’s Ed Davey’s call for a regulatory inquiry into the big energy producers, with a view to breaking them up if they are abusing their position.

It was no surprise that shares in Scottish Gas-owning Centrica fell 2 per cent at one stage yesterday, as that group is squarely in the politicians’ gunsights on prices now that SSE has thrown the firecracker into the room.

New banking mis-selling shock

MAÑAna – Spanish for “we’ll get around to it sometime in the indefinite future”. Santander UK has been fined £12.4 million by the Financial Conduct Authority (FCA) for serious failings in how it offered financial advice to punters in its branches.

This was happening between 2010 and 2012, says the FCA – ie between two and four years after the financial crash, the public post-mortem and industry-wide claims that banks had learnt their lessons.

No they hadn’t.

Among Santander’s faults were suggesting that some investments “will likely double”. I love that “likely”.

Twitter: @martinflanagan8