SSE profits up with more price rises expected
• Rise in profits put down to winter being colder than previous year
• SSE say more prices rises expected
• Company reduces executive bonuses over mis-selling scandal
The latest windfall was described as a “slap in the face” for customers after the company was last month hit with a record fine for mis-selling and in October raised its tariffs by an inflation-busting 9 per cent.
Full-year results showed that profits from SSE’s retail division, which supplies energy to UK households, were up to £410.1 million in the 12 months to March – or £1.1m a day – from £321.6m the year before.
They revealed that earnings just from energy supply were up by an even greater 34 per cent, from £271.7m to £364.2m, when falls in areas such as boiler installation and meter supply were stripped out.
Overall, 2012-13 pre-tax profits at SSE, which trades as Southern Electric, Swalec and Scottish Hydro, were up 6 per cent from £1.34 billion to £1.41bn.
It said it took more money from UK households because the weather was colder in 11 of the 12 months of the year than it was the year before. Gas consumption was up 21 per cent while electricity rose 5 per cent. Customer numbers fell 80,000 to 9.47 million.
SSE said it was disappointed that it had to raise tariffs in October, blaming costs including wholesale energy price rises. But it warned that more were in the pipeline because it was facing additional costs of more than £80 per dual-fuel customer in 2013-14.
“Unless there is a sustained reduction in prices in wholesale gas and electricity markets, it is highly likely that these additional costs will eventually have to be reflected in higher prices for household customers,” it said.
The company added that it intended to “resist this trend of higher costs for as long as possible to shield customers from the unwelcome impact of higher prices”.
Meanwhile, it announced that annual bonuses for executive directors were being slashed by 40 per cent in the wake of the mis-selling scandal.
Outgoing chief executive Ian Marchant, due to leave in June, has waived his entire £329,000 bonus, as well as a share payment from 2012. He missed out on this bonus for 2013.
But he will still benefit from a 2011 share award and a £10.4m pension pot which will pay him £420,000 a year from the age of 60, unless he cashes it in earlier.
Last month, SSE was fined £10.5m by regulators after potential customers were misled over prices and savings that could be made by switching supplier. The company has set up a compensation fund for those affected.
Lord Smith of Kelvin, SSE’s chairman, apologised over the scandal. He said: “Companies don’t just have to earn profits; they have to earn profits in the right way.”
But the words were likely to come as cold comfort to customers being landed with large rises in their bills after the prolonged cold spell earlier this year.
The company defended its profits, taking out a full-page newspaper advert ahead of the results, saying: “What has an energy company ever done for us? Quite a lot, as it happens.”
The advert set out SSE’s contributions to the UK, including millions of pounds a day of investment and taxes, adding: “For doing this, we make a profit.”
But Richard Lloyd, executive director of consumer group Which?, said: “Such a large profit announcement will be a slap in the face for SSE’s customers who have been hit with an inflation-busting price rise and seen this company given a record- breaking fine for mis-selling.”
The group Consumer Futures called on SSE to use its bumper profits for a one-off energy debt write-off, targeted at the most hard-pressed households.
Caroline Flint, Labour’s shadow energy secretary, said: “Like all the other big energy firms, when SSE imposed inflation-busting price hikes last winter they claimed they had no choice.
“But these figures show they have increased their profits on the back of spiralling bills for hard-pressed people.”