SSE to raise dividend to shareholders by 5% as first half profits soar to £397.5 million
Utility giant Scottish and Southern Energy (SSE) has reported a huge rise in first-half profits, up 38.3 per cent on a year ago to £397.5 million.
The profit figures for the six months to the end of September compare with profits of £287.4 million for the same period a year ago.
In May the group reported a 21 per cent drop in profits in domestic energy supply for the year to March 31, 2012.
Perth-based SSE, the UK's second biggest energy supplier with 9.5 million household and business customers, said at the time rising wholesale energy costs and falling consumer consumption were to blame.
The group, which includes Southern Electric, Swalec and Scottish Hydro, still managed to generate a profit of £271.7 million for the year after raising household gas prices by 18 per cent on average in September 2011 and electricity prices by 11 per cent.
A 4.5 per cent price reduction announced in January of this year as a result of falling wholesale prices came into force in late March, just five days before the group's financial year end.
But the group was the first of the so-called 'big six' energy suppliers to announce further price rises for both gas and electricity back in August, adding a rise of nine per cent to both its gas and electricity prices effective from October 15, 2012.
Those latest price rises would add around £100 to SSE's standard dual-fuel bill, taking it from £1,172 to £1,274.
SSE said the latest price rises reflect “sustained increases” in the cost of using electricity and gas networks and an average nine per cent rise in wholesale energy prices which came into effect in October.
SEE announced today it was increasing its dividend to shareholders by five per cent to 25.2 pence per share.
The group's chairman, Lord Smith of Kelvin, defending the rise in profits, said: "While some observers may choose to criticise SSE for making a profit and paying a dividend, I believe that profit and dividend allow SSE to employ people, pay tax, provide services that customers need, make investments that keep the lights on and create jobs while providing an income return that shareholders like pension funds need.”
The UK Government yesterday called for an urgent enquiry into allegations UK power companies were “regularly” manipulating the UK's £300 billion wholesale gas market.
A whistleblower who worked for a company responsible for setting benchmark prices, highlighted trading in the British wholesale gas market on September 28 of this year.
This is a key date in the wholesale trading calender as it marks the end of the financial year for gas trading and therefore has implications on future pricing.
The trader, who worked for ICIS Heren, has provided data which shows the price gas contracts were being bought and sold for on September 28 – called day ahead gas contracts – dropped sharply at 4:30pm, the same time ICIS Heren took its snapshot for its benchmark reading of the market.
ICIS Heren warned the energy regulator Ofgem it had seen evidence of suspect trading on 28 September.
City watchdog the Financial Services Authority is investigating the claims.
A recent European gas hub report published by ICIS also points to a “strong industry resistance” from energy firms to tighten regulation of how wholesale prices are set for gas and electricity.
The report states: "The recent London interbank offered rate (Libor) scandal engulfing major financial institutions also prompted a European commission consultation in early September on the regulation of key indices, including those for coal, natural gas and electricity.
“However, strong industry resistance to many of the proposals has so far resulted in the watering down of many elements of the current regulatory proposals.”