Energy deal off the boil...

Merger doubt as suppliers hit by price cap

ENERGY giant SSE has blamed a cap on rip-off prices for putting its mega-merger with rival npower at risk.

The firm yesterday warned there was “some uncertainty” about whether the deal will go ahead as planned.

Bosses cited limits on how much suppliers can charge 11 million customers on costly “default” deals from January.

The cap, mainly on standard variable tariffs, will save the average customer around £76 a year – but will hit suppliers’ profits.

SSE said: “There is now some uncertainty as to whether this transaction can be completed as originally contemplated.”

It came as the company announced that half-year losses in its energy supply arm ballooned from £17.8million to £68.7m.

SSE has lost 290,000 household electricity customers and 150,000 gas customers in the past year.

Profits in the rest of its business, which include generating energy, slumped 41% to £246m.

Victoria Arrington, from price comparison website Energy helpline.com, said: “With the price cap due to arrive soon, and profits dropping dramatically, it’s clear suppliers will have to be ultra competitive to thrive in the future. They’ll need to offer both great deals and excellent customer service.”

Despite the drop in profits, SSE still upped its interim dividend by 3.2% to 29.3p per share.

But George Salmon, analyst at broker Hargreaves Lansdown, warned SSE’s long track record of bumper shareholder payouts could be in doubt.

He said: “SSE needs to reinvest huge amounts back into running its energy network.

“That means there’s not always enough cash left over to cover the payout to shareholders.”