Merger doubt as suppliers hit by price cap

ENERGY giants SSE have blamed a cap on rip-off prices for putting their mega-merger with rivals 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 11million customers on costly “default” deals from January.

The cap, mainly on standard variable tariffs, will save the average customer about £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 their energy supply arm had ballooned from £17.8million to £68.7million.

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

Profits in the rest of their business, which include generating energy, slumped 41 per cent to £246million.

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 their interim dividend by 3.2 per cent to 29.3p per share.

But George Salmon, analyst at brokers Hargreaves Lansdown, warned SSE’s track record of bumper shareholder payouts could be in doubt. He said: “SSE need to reinvest huge amounts back into running their energy network. That means there’s not always enough cash left to cover the payout to shareholders.” Oil 348.0 547.0 248.1 316.8 1191.0 1940.0 94.7 285.3 2406.5 1727.5 1390.0 2054.0 +8.0 +5.2 -2.0 +1.0 +59.5 +12.0 +1.7 -1.8 -22.5 +1.5 -4.5 +2.0