Mild weather hits SSE profits as average energy bills drop

City Editor

Wednesday 1 February 2012

PROFITS at SSE, the owner of Scottish Hydro Electric, will be up again this year, but the rise is likely to be at the lower end of City forecasts after a relatively mild winter hit energy demand.

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TIM SHARP CITY EDITOR

The company, previously called Scottish & Southern Energy, said that adjusted profit for the year to March 31 is expected to rise, "delivering a similar level of growth to that achieved in each of the last three years".

The mild winter affected income at the Perth-based company, with the average customer bill for electricity and gas amounting to £710 in the nine months to December 31, against £760 for the same period in 2010.Electricity consumption by SSE's household customers fell 8.3%, while gas was down 26.6%.SSE said that energy efficiency measures are also likely to have played a part in the fall.The company continues to be on course to increase its full-year dividend by at least 2% more than retail prices index inflation, meaning investors can expect to be paid around 80p a share.Analyst Angelos Anastasiou of Investec said the update "appears to be slightly disappointing". "While profit growth is still targeted for the current year, it is at the bottom end of the 'moderate' [2% to 5%] range suggested with the interim results, and we fear downgrades are likely for future years."However, others in the City were more sanguine, and SSE's shares rose 24p, or 2%, to 1233p. Consensus estimates compiled by Reuters suggest the City expects a pre-tax profit of £1.3bn for the year. SSE also saw its gas and electricity customers fall as it lost 50,000 accounts to take its core customer base to 9.6 million. Including home services, its customer accounts now total 10 million.In the autumn, SSE joined other suppliers in upping prices in response to rising wholesale costs. In its case it put up gas by 18% and electricity 11%.However, last month it said it would cut its household gas unit price by 4.5% from March 26 and has extended its pledge not to increase prices by two months to October 2012.In contrast to last year when cold, still conditions hit green energy generation, total electricity from SSE's renewable sources, including hydroelectric schemes, wind farms and a biomass plant was 5.3 terrawatt hours in the nine month period, up from 3.2TWH last year. This reflected wet and windy weather conditions and increased capacity.SSE has now installed turbines with a total capacity of more than 180MW at the Clyde onshore wind farm, which is expected to cost £500m to build and have capacity of 350MW on completion. It has also started full generation at its 68-turbine Griffin wind farm in Perthshire. It has also installed turbines with a capacity of 40MW, out of a planned 70MW, at its Gordonbush wind farm near Brora, due to be completed in the next few months. Work on SSE's Glendoe hydroelectric scheme near Loch Ness, which was closed by a rockfall just months after generation began, "is continuing to progress well".

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Mild weather hits SSE profits as average energy bills drop

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