THE energy supply business of SSE, which delivers power to millions of UK homes and businesses, has hiked profits by nearly 40 per cent to £368.7 million - despite losing more than half a million customers.
The profit rise has led the energy giant to come under renewed pressure to make further cuts to its gas and electricity bills, which opponents claim have not come down steeply or quickly enough.
SSE has pledged to extend its freeze on standard household energy prices until July 2016, having cut the average household gas price by 4.1 per cent in April.
"The news that profits have soared will not go down well with many SSE customers, especially given higher winter bills following the cold winter," said Anne Robinson, director of consumer policy at uSwitch.com. "The modest cuts by the big six so far this year have simply not gone far enough, and the fact remains that SSE was the last of the big six suppliers to implement a standard gas tariff reduction this year."
SSE reported that customer numbers had fallen to 8.58m from 9.1m in the year to March 31. It said customer numbers, which peaked at 9.65m in March 2011, are now at 2008 levels.
The company believes the fall in customers reflects the competition in the UK energy retail market, stating there are 10 companies supplying at least 250,000 customers. In addition, it pointed to a larger number of smaller competitors, which it said are "exempt from the cost of certain social and environmental levies".
According to SSE, consumers could save around £100 if such levies were not part of most energy bills, with those savings forecast to rise to around £200 by 2020.
SSE has stated the level of competition in the energy supply sector signals the market is working well, noting it has made this point in its submission to the Competition and Markets Authority, currently investigating the market.
"It's been a challenging year with some difficult decisions being made, but it is a year in which we have continued to deliver for customers," said chief executive Alistair Phillips-Davies.
"In a very competitive market we've cut prices twice in 13 months and extended our price guarantee, which will mean SSE customers will have seen no increases for at least two and a half years."
SSE delivered a modest increase of 0.9 per cent in underlying profit before tax to £1.56bn across the entirety of its business, which includes network and wholesale operations as well as retail.
The company said its flat performance reflected a range of regulatory and political pressures. These included the first ever auction for electricity generation capacity, the CMA probe, and the final proposals from Ofgem on the eight-year price control in electricity distribution. It also highlighted the build up to the recent general election.
In wholesale, profits fell by 25.3 per cent to £473.8m, which the company attributed to tough market conditions and lower output.
Chairman Lord Smith of Kelvin, who is stepping down and will be replaced by Richard Gillingwater in July, said "persistently difficult" conditions for thermal power stations had driven SSE's decision to close its coal-fired Ferrybridge power station in Yorkshire by March 31, 2016. The 48-year-old plant is forecast to lose £100m over the next five years.
SSE said it hopes to transfer the 172 staff affected to other sites, including the Keadby gas fired power station in Lincolnshire, which it may re-open by the end of October.
Meanwhile, operating profit in the energy giant's networks division was lifted by 1.8 per cent to £936.8m. Shares in SSE closed down 15p at 1,681p.
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