Profits hike at power firm sparks energy bills anger

Thursday 15 November 2012

POWER company Scottish & Southern Energy (SSE) has come under fire for reporting a £400 million profit just one month after its bills went up by almost 10%.

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Jody Harrison and michael Settle

SSE said its half-year profits had increased by 38%, generating hundreds of thousands of pounds for shareholders who will now receive a dividend of 25.5p a share.

The average SSE customer now pays £1354 a year for their energy bill following the rise last month, compared to £1094 in January 2011 – an increase of £260.

SSE chairman Lord Smith of Kelvin said the company's household energy supply business, which has returned to the black with profits of £48.7m, accounted for only 8% of total operating profits.However, critics have said householders will be angry at the massive profits being made while they struggle with increased energy bills over the winter months.Richard Lloyd, executive director of consumer group Which?, said the Government should set up an independent review to look at whether recent price increases were justified. "Without greater scrutiny of energy prices, consumers simply will not believe they are getting a good deal," he said.Trisha McAuley, deputy director of Consumer Focus Scotland, said mistrust over energy prices had deepened. She added: "Energy companies need to make a profit so they can invest in our energy infrastructure. But if confidence is to be rebuilt in this market, the information all energy firms are required to provide must be fully transparent, comparable, and include profit and trading information from across the whole of their business."SSE, which also trades as Southern Electric, Swalec and Scottish Hydro, is the UK's second-largest generator of electricity and supplies power and gas to 9.6 million household and business accounts.Ann Robinson, director of Consumer Policy at uSwitch, said: "Consumers will be bitterly disappointed to see profits soaring so shortly after being asked to swallow a 9% price hike. "While SSE has pledged not to increase its prices again until at least the second half of 2013, whether this will be enough to satisfy customers in the face of these headline profits remains to be seen."SSE has now committed to cap household energy prices until the second half of next year, and said its margin on energy supply was 1.5% in the last six months.Lord Smith said: "I believe profit and dividend allow SSE to employ people, pay tax, provide services customers need, make investments that keep the lights on and create jobs, while providing an income return shareholders like pension funds need."SSE is one of five energy firms that have announced inflation-busting increases to the prices of their domestic electricity bills this year. Of the other "big six" companies, ScottishPower has announced plans to hike bills by an average 7% from December 3, British Gas will impose an average increase of 6% affecting 8.5 million customers today, while Npower plan an average rise of 8.8% for gas and 9.1% for electricity from November 26 and EDF Energy will raise its domestic gas and electricity tariffs by 10.8% next month. Only E.ON has ruled out price rises.At Westminster, Tom Greatrex, Labour's Shadow Energy Minister, said: "People will not understand how the energy giants can get away with inflation-busting price rises this winter when their profits are already increasing."In the wake of the allegations this week about price fixing in the electricity and gas markets, the time has come for a complete overhaul of our energy market."

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Profits hike at power firm sparks energy bills anger

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