The first UK energy supplier to increase gas prices this year announced yesterday a 6% fall in half-year profits amid “challenging” trading conditions.
Scottish and Southern Energy (SSE) – the UK’s second biggest energy firm, with 9.3million customer accounts – said adjusted profits fell to £385.5million as a result of a 25% rise in wholesale gas prices and a weather-related fall in output from its hydro-electric schemes and windfarms.
But unadjusted profits during the six months to September 30 rose to £644.8million, against £514.4million a year earlier.
According to SSE, the adjusted figures give a better picture of its business performance as they reflect issues including increased costs and changing wholesale gas prices and consumer demand.
SSE’s customers are facing hefty energy bill increases after the Perth-based company raised its gas prices by nearly 10% last month, with the change due to take effect from December 1.
Their annual gas bills, on average, will increase by £5.60 a month to £782. Dual fuel customers will see their bills rise to £1,226 a year from £1,159 previously.
The timing of the rise has been criticised, coming at the start of winter, when gas consumption soars, and just weeks before Christmas and a planned increase in VAT to 20%.
Yesterday, SSE, whose businesses include Scottish Hydro Electric, said it achieved a net gain of 100,000 customer accounts during the first half of its trading year.
The increase in prices to the company’s 3.6million gas customers should boost margins in the second half and is expected to keep the firm on course to meet analysts’ forecasts for full- year profits of around £1.3billion.
SSE chairman Lord Smith of Kelvin said: “The past six months have not been easy, with low renewable energy output and higher wholesale gas costs contributing to a challenging business environment.”
First-half revenue increased to £10.65billion, compared with £8.04billion previously.
The group spent £377.4million on renewable generation and £126.6million on its electricity networks during the latest period.
It said its investment programme, under which it will spend up to £1.7billion in each of the five years to 2015, was well-financed.
SSE, which expects to meet its recent dividend promise for an increase of at least 2% a year in real terms for the next five years, also announced it was putting off plans to build more gas storage because of regulatory uncertainty and reduced profits.
But it still hopes to open its first nuclear plant, together with consortium partners GDF Suaez and Iberdrola, around 2023. The consortium has an option to buy a site for a new nuclear facility at Sellafield, Cumbria.
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