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