SSE may re­treat from do­mes­tic en­ergy in the wake of price caps

The Sunday Telegraph - Money & Business - - Front page - By Jil­lian Am­brose

BRI­TAIN’S sec­ond-largest en­ergy sup­plier is eye­ing the exit as the Govern­ment’s crack­down on en­ergy bills threat­ens prof­its.

SSE, for­merly known as Scot­tish and South­ern En­ergy, may turn its back on sup­ply­ing gas and power to al­most 8m Bri­tish homes af­ter years of po­lit­i­cal threats against the six largest en­ergy com­pa­nies comes to a head.

City sources say the FTSE 100 en­ergy gi­ant is qui­etly dis­cussing early plans to sell off its cus­tomer ac­counts, or even spin the busi­ness off as a sep­a­rate listed com­pany in or­der to fo­cus on net­works and re­new­able en­ergy and avoid the Govern­ment’s loom­ing en­ergy price cap.

The chance of a rad­i­cal change to the Big Six comes as min­is­ters leg­is­late the deep­est in­ter­ven­tion in the mar­ket since pri­vati­sa­tion in or­der to cap stan­dard tar­iffs.

“At this stage the busi­ness is more trou­ble than it’s worth,” said one in­vest­ment banker who has spo­ken with SSE ex­ec­u­tives.

Al­though SSE holds one of the largest re­tail units in the mar­ket the busi­ness is dwarfed by the group’s prof­its from run­ning thou­sands of miles of pipes and ca­bles, as well as the scores of wind farms which make up its gen­er­a­tion port­fo­lio.

“The man­age­ment team spends 85pc of its time with in­vestors an­swer­ing ques­tions about the en­ergy price cap, when it only af­fects 15pc of their busi­ness,” the source added. SSE will need to wait for clar­ity around the cap to emerge be­fore putting an es­cape plan into mo­tion.

Npower, owned by Innogy, has also been iden­ti­fied by se­nior in­dus­try ex­ec­u­tives as the most likely to exit af­ter years of losses – de­spite mar­ket­ing one of the most ex­pen­sive tar­iffs.

“In five years the Big Six may not ex­ist,” an in­dus­try source said.

SSE is one of only two Bri­tish stal­warts in the Big Six, along­side Bri­tish Gas which runs an in­creas­ingly cus­tomer-fo­cused busi­ness. The oth­ers in­clude Ger­manowned Npower and Eon UK, France’s EDF En­ergy and Span­ish-owned Scot­tish Power. A spokesman for SSE de­clined to com­ment.

‘At this stage the busi­ness is more trou­ble than it’s worth’

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