SSE today announced a 9.6 per cent rise in full-year profit to £1.55bn, which was poorly received by consumer groups.
While profits for its supply arm fell 28.6 per cent, critics argued that the £1.55bn figure jarred with the 8.2 per cent price hike on customers’ bills last year.
SSE is losing customers. Its number of accounts fell from 9.47m to 9.1m over the period, which the company claims reflects “the highly competitive market conditions in Great Britain”.
Data from energy switching service Make It Cheaper today shows that out of the 64,000 people who switched energy suppliers via its sites last month, just one per cent joined SSE.
It wasn’t just losing out to smaller suppliers – 21 per cent of those switching chose one of the big six. That's despite SSE pledging to freeze energy prices until 2016. “It remains the only such promise in the market and one I am extremely proud of,” said Will Morris, group managing director of the retail division.
But with wholesale gas prices on a downhill slope, consumer groups are today calling for bills to be cut rather than frozen. “Now, with healthy group profits and wholesale gas prices falling, we expect SSE to promise not just to shield people from price increases but to fairly pass on lower costs to their customers,” said Richard Lloyd, executive director at Which?.
When it comes to price cuts, SSE has got itself over a barrel. By buying so much wholesale power in futures contracts to guarantee the price freeze, it leaves itself without much flexibility to lower bills. “This is one of the fundamental flaws in Labour’s pledge to freeze customers’ energy bills. SSE hasn’t got much scope to lower its prices now,” Peter Atherton, analyst at Liberum, told City A.M.
If its competitors – who haven’t pledged a price freeze – start lowering their bills this will look even worse. Customers are leaving, bills won’t be falling and even the stock market wasn’t too impressed – SSE’s shares fell over one per cent this morning. The profits may have been in line with expectations, but SSE is not out of the woods yet.