Fall in customer numbers but rise in energy usage reported in first nine months of financial year
Utility firm SSE is forecasting a four to five per cent rise in pre-tax profits for the year to April 1.
It said its full-year dividend to shareholders will be “at least two per cent more than RPI (retail price index) inflation” at around 84 pence per share.
SSE, the UK's second largest energy supplier, posted profits of £1.33 billion for the 2011 year.
However, SSE also reported a 21 per cent drop in profit in domestic energy supply, blaming rising wholesale energy costs and falling consumer consumption.
SSE's 2012 profits are up despite a fall in the retail customers, from 9.55 million to 9.46 million, and including 130,000 customers gained through the acquisition of Phoenix Holdings Ltd last June.
The Perth-based energy supplier said household electricity consumption is estimated to have risen to 2,991kWh, compared with 2,877kWh in the first nine months, year on year, and gas consumption is estimated to be 9,186kWh, compared with 7,506kWh last year “reflecting cooler weather conditions during the nine months”.
SSE, which owns Southern Electric, Swalec and Scottish Hydro, reported a 38 per cent rise in first-half profits last November to £397.5 million just a month after raising its domestic gas and electricity prices nine per cent.
The company said the rise in domestic prices reflects market conditions and price pressures outwith its control.
Last November the UK Government ordered an urgent inquiry amid claims made by a whistleblower the UK's £300 billion wholesale gas market had been “regularly” manipulated by big power companies.
Energy regulator Ofgem and the City watchdog the Financial Services Authority are currently investigating the claims.
A recent European gas hub report published by ICIS Heren also highlighted “strong industry resistance” from energy firms to tighten regulation of how wholesale prices are set for gas and electricity.
That report states: "The recent London interbank offered rate (Libor) scandal engulfing major financial institutions also prompted a European Commission consultation in early September (2012) 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.”
SSE said in a market update today it expects to report all three of its segments - networks, retail and wholesale - have been profitable during 2012/13.
Chief executive Ian Marchant, who recently announced plans to step down from SSE in the summer, said: "This financial year has been characterised by continuing economic uncertainty and challenging energy market conditions which have affected energy customers and electricity producers alike.
“SSE's balanced model of market-based and economically-regulated businesses and strategy of focusing on operations and investments in these businesses is again proving to be robust.
“The overall performance of the company has been good in 2012/13 and I'm pleased that SSE is on course to deliver further growth in the dividend and an encouraging increase in adjusted profit before tax in this financial year.”
Marchant will reportedly receive a £15 million “golden goodbye” pay off package from SSE, including salary, pension, shares and bonuses.