SSE accused of ‘rip off’ over £1.5bn profit
ENERGY giant SSE has revealed it expects profits to soar to £1.5 billion this year and that it will increase payouts to shareholders, further inflaming a row among politicians and consumer groups over the impact of bills on households.
Just two months after a major price rise came into effect for its nine million customers, the Perth-based firm said it was on course to deliver a pre-tax profit increase of 8.8 per cent for the year to the end of March and would be likely to increase dividends handed out to its shareholders by 3 per cent. A price increase of £104.48 for SSE’s dual-fuel customers came into effect in November and sparked a round of winter price hikes by all the “big six” major energy providers.
Both the UK government and Labour have pledged to tackle soaring energy bills amid outrage among consumers, which was further fuelled this week when Npower chief executive Paul Massara claimed prices were high because the country’s “old and draughty houses” waste so much gas and electricity.
Chancellor George Osborne has announced changes to green levies which reduce costs for utility firms, and SSE has said it will cut prices by £45 after the changes come in on 24 March.
Shadow energy secretary Caroline Flint has pledged that if Labour is elected, it will implement the “biggest overhaul of our energy market since privatisation” and force utility firms to freeze prices until 2017.
After yesterday’s announcement by SSE, Ms Flint said: “Yet again we see an energy company increasing its profits and payouts to shareholders on the back of spiralling bills for hard-pressed consumers. The reason the energy companies think they can get away with treating their customers so poorly is because they know David Cameron will never stand up to them.”
Labour MP John Robertson, who sits on Westminster’s energy select committee, said: “This is a disgrace. How can SSE possibly have another boost to their profits after losing so many customers? These energy barons are ripping off their customers and lining their pockets with the hard-earned cash of people struggling to pay their bills.”
The typical annual bill for SSE customers will be £1,304 by March, £13 higher than the UK average, according to comparison website uSwitch.com. Across the board, industry experts have calculated that the typical household utility bill has gone up by 168 per cent in the past decade.
SSE has said it will cap prices at their new level until spring next year, following similar announcements by rivals Npower, British Gas and EDF. British Gas has already implemented the green levies cut, while ScottishPower is to bring in its reduction at the end of the month and Npower is to bring in its own cut at the end of February.
EDF and E.ON introduced a smaller price increase than rivals in anticipation of changes to government policy.
However, Claire Osborne, an energy expert at uSwitch.com, said SSE’s announcement was “like waving a red rag at a bull”. She said: “This will come as a shock to customers who have been told they must wait until the end of March for their prices to be cut in line with the government’s levy reductions.”
Citizens Advice Scotland spokeswoman Sarah Beattie-Smith said: “At a time when so many households are still struggling with high bills and public confidence in the energy companies is so low, it’s very disappointing that SSE have chosen to put their shareholders ahead of hard-pressed consumers.”
Trisha McAuley, director for Scotland of Consumer Futures, said: “The sector is riding out tough economic times better than its customers are, so there’s a pressing need to help the latter. It should offer their customers respite by bringing forward its price cut to an earlier date.”
In yesterday’s interim trading update, issued ahead of the company’s full-year results due on 21 May, SSE chief executive Alistair Phillips-Davies claimed he was “encouraged” by the recent focus on the affordability of utility bills for householders. He added: “It is encouraging that SSE is on course to deliver real growth in the dividend and increases in adjusted earnings per share and adjusted profit before tax.”
A spokesman for SSE said: “Our profit figure is a big number but it’s not as big as the number we invest every year in the vital energy infrastructure needed to keep the lights on.”