Energy giant SSE today posted a huge 38% hike in half-year profits to £397.5 million, only weeks after hitting households with a 9% rise in gas and electricity bills.
SSE’s chairman, Lord Smith of Kelvin, claimed the pre-tax adjusted profit it made in the six months to September, before the price rise kicked in, was needed to invest and “keep the lights on.”
However SSE today raised its interim dividend to shareholders by 5% to 25.2p a share — and promised more rises would follow, triggering storms of criticism from customers and analysts. Almost 9 million customers are having to pay an extra £119 on their dual fuel bill — taking the average cost to £1,354 a year — this winter after SSE, which operates in London as Southern Electric, became the first of the Big Six to announce a rise in bills.
At the time, SSE’s chief executive Ian Marchant claimed it was “unavoidable” due to “the costs of mandatory Government-sponsored schemes and the price SSE has paid for energy in the wholesale markets.” SSE’s average bill was £525 in 2004, and has soared 158% since then.
Ann Robinson, director of consumer policy at uSwitch, said today: “Consumers will be bitterly disappointed to see profits soaring so shortly after being asked to swallow a 9% price hike. In just under two years customers have seen bills rocket by £260 or 24%.”
But Lord Smith hit back: “While some observers may choose to criticise SSE for making a profit and paying a dividend, I believe that profit and dividend allow SSE to employ people, pay tax, provide services that customers need, make investments that keep the lights on and create jobs, while providing an income return that shareholders like pension funds need.”
He added that SSE had “every confidence of extending further its record of annual above-inflation dividend growth, and it is targeting a full-year increase of at least 2% more than RPI inflation, to around 84p, for 2012- 13 and annual increases that are above RPI inflation in the following years.”
The results come as energy firms face fresh scrutiny over allegations they had been involved in price-rigging of the wholesale gas market. All firms deny involvement, and Marchant today said he was “entirely confident” that SSE operates legitimately . He added: “SSE will support strongly any efforts by the FSA and Ofgem to deal robustly with any activity by any market participant which is proved to be wrong.”