SSE profits rise and warns of more energy price hikes

Energy supplier SSE has announced a rise in profits for the last 12 months due to the prolonged cold weather despite disruption to its services and a fine from regulators. […]

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By Priyanka Shrestha

Energy supplier SSE has announced a rise in profits for the last 12 months due to the prolonged cold weather despite disruption to its services and a fine from regulators.

Its year-on-year profits rose 27.5%, with retail operating profits up from £321.6 million to £410.1 million and reported pre-tax profits of £1.4 billion from April 2012 up to the end of March this year, up 5.6% compared to the previous year.

Although the cold weather helped boost energy usage across UK households, SSE also received a record fine of £10.5 million from Ofgem for misleading potential customers and is expected to pay another £1.5 million in compensation to those who were affected.

Lord Smith of Kelvin, Chairman of SSE said the firm had faced “two of its biggest issues” since it was formed in 1998.

He said: “The last week of March saw extreme snow falls and ice in the west of Scotland which inflicted unprecedented damage on the electricity network on Arran and Kintyre. Over 500 engineers and other employees from the company were deployed to help restore electricity supplies to households, businesses and other premises, working closely with a wide range of authorities and agencies.”

In response to the mis-selling, he added: “Like everyone else associated with SSE I have no hesitation in apologising unequivocally for the breaches that occurred but while the breaches were clearly wrong, the response has been absolutely right.”

The increase in gas and electricity consumption across the country also follows a 9% rise in energy bills for households. The energy company said gas and electricity usage went up 21% and 5% respectively. However, its customer numbers in Britain and Ireland fell by 80,000 to 9.47 million.

SSE warned there could be more price rises as it was facing additional costs of more than £80 per dual fuel customer this financial year.

The supplier said: “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.”

Operating profits in the networks business also rose 18.9% to £876.1 million, however, profits in the power generation arm fell 16.2% to £509.5 million.

Consumer body Which? said such a large profit announcement would be a “slap in the face” for its customers.

Executive Director Richard Lloyd added: “Rising energy prices are consistently one of consumers top financial concerns and millions will be shocked by the size of their bill after such a cold winter. Bills will only be kept as low as possible if there is more effective competition, easier switching between suppliers and every tariff presented in a clear, consistent and simple way so people can easily spot the cheapest deal. Ofgem’s proposals, backed by the Prime Minister, don’t go far enough.”

British Gas and National Grid also announced huge increase in profits earlier this month.