SCOTTISH HydroElectric owner SSE has vowed to hand its shareholders an above-inflation dividend rise despite claiming a profit fall at its retail arm.

The reassurance to investors comes as controversy rages over a pledge by Labour Party leader Ed Miliband to freeze energy tariffs ahead of promised reform of the industry if he comes to power.

SSE finance director Gregor Alexander said: "Despite challenging energy market conditions, SSE has made solid progress in recent months, including taking a number of specific steps to help small business customers and improve standards for household customers.

"We continue to benefit from maintaining a balanced range of energy businesses, illustrated by again meeting the criteria for a single A credit rating.

"Despite the intensifying political debate, we will maintain our operational and financial discipline, to enable us to deliver an above-inflation increase in the dividend for this financial year and beyond."

SSE's last interim dividend, which was paid in March, came in at 25.2p. If SSE manages to at least match retail prices index (RPI) inflation - 3.1% in August - this should push it up to nearly 26p for the payment in respect of the half-year just completed.

SSE, which like the other Big Six suppliers such as Scottish Gas has been criticised for charging retail customers too much, said its adjusted profit before tax for the six months to September 30 is expected to be lower than it was in the same six months in 2012.

In particular, SSE, which has a strong customer base in southern England as well as Scotland, expects to report its retail arm, which supplies households, has been loss-making in the period.

This it put down to higher wholesale gas costs as global prices rose, the increased impact of fixed distribution due to the industry putting in more investment and other costs, such as Government-imposed environmental and social programmes. The impact of all of these factors was magnified as they occurred in the spring and summer when energy consumption is low.

It also had to deal with heavy snowfall and downed power lines in Kintyre and Arran in March this year.

But Perth-based SSE said its wholesale and networks arms are expected to have been profitable during the six months.

Its comments chime with the assertion SSE made last week that 85% of the costs it faces are outside its control.

Volatility in the sector meant that SSE's first-half profits will be a lower proportion of the full-year total compared to last year, it said.

While SSE's focus on earnings at its retail business is not thought to be down to softening up customers for another rise in tariffs in the short-term, the company has made great play of the cost pressures facing the industry which are often cited when bills increase.

However, questions will remain about whether it is right that energy companies can both supply energy to the market and separately sell it.

Last week, Mr Miliband indicated he would take action if energy companies defied a Labour government by raising prices ahead of his promised freeze.