SSE feeling heat as household profits grow

Big Six supplier has seen pre-tax margins grow every year since 2013, despite bill criticisms

Britain’s second largest energy supplier has steadily grown the profits it makes from serving households for a third year in a row despite mounting political pressure to keep bills low. SSE is the only one of the Big Six suppliers to have grown its pre-tax margins every year since 2013.

BRITAIN’S second largest energy supplier has steadily grown the profits it makes from serving households for a third year in a row despite mounting political pressure to keep bills low.

The energy regulator has revealed that SSE is the only Big Six supplier to have grown its pre-tax margins every year since 2013, even as the debate over energy bills and profits has heated up.

The steady gains have ballooned SSE’S profit measure for supplying 7.7m homes with gas and power from 3.94pc in 2013 to 6.95pc last year, rapidly outpacing the 4.48pc aggregate for the Big Six last year.

Ofgem’s latest retail market report uses data provided by the energy suppliers themselves, which are standardised to show the difference between reported revenues and profits once costs, depreciation and amortisation are subtracted.

A spokesman for the group said the aggregate profit margin figure across the Big Six suppliers “has been skewed” lower by EDF Energy and Npower, which both made a pre-tax loss of 0.87pc and 6.26pc respectively.

She added that SSE’S margins were still in line with rivals British Gas and Eon. British Gas has consistently emerged as the most profitable supplier in Ofgem’s annual survey, with margins of 7.18pc last year.

SSE’S profit boom puts the company narrowly behind British Gas as the most lucrative major supplier in the troubled market after profit margins at the Centrica-owned supplier shrank last year. Meanwhile, profit margins at German-owned Eon have followed a similar trajectory, albeit with a margin squeeze in 2015 across its far smaller customer base.

SSE’S steady margin increases have emerged just months after boss Alistair Phillips-davies’s pay doubled to £2.92m for the year ended March, driving the ratio between his pay packet and that of the average employee to 72:1, having been 42:1 a year earlier.

The Big Six already face growing calls for the regulator to cap energy prices after surviving a major investigation by the UK’S competition authorities and countless political threats to curtail rising energy bills.

SSE and British Gas are both expected to come under pressure after Ofgem said it would fast-track its plans to cap energy bills for 2m customers using pre-payment energy meters before April, most of whom are supplied by the pair.

The plans stop far short of Theresa May’s pledge earlier this year to cap prices for 17m homes on standard variable tariffs. That was intended to protect “sticky” energy customers who failed to shop around for a better deal, but Ofgem’s latest figures showed that competition in this market was displaying steady signs of rising competition.