SSE’s pre-tax profits jumped by 9.6 per cent to £1.55 billion for the year to March 31, as a blow to its retail business from a mild winter was more than offset by its networks arm, wholesale gas production and renewable-energy operations.
The figures follow a year of turmoil for the energy industry as politicians turn up the heat on the sector in the wake of Labour leader Ed Miliband’s bid to impose a price freeze on bills last autumn.
Energy firms are also facing a new probe from the Competition and Markets Authority. The pressure prompted SSE to freeze household energy prices from March until 2016, although British Gas owner Centrica has followed it with a pledge not to raise prices this year.
Chairman Lord Smith of Kelvin admitted the year had been “challenging” but added: “We believe SSE is not part of the problem but part of the solution.”
Lower energy use by customers in one of the mildest winters for more than a century plus higher costs — including the price of gas — meant that profits from energy supply sank by a third to £246.2 million.
This was despite an 8.2 per cent hike in prices last November which pushed up the average dual-fuel energy bill by more than £100 to £1,380.
The deeply unpopular move meant that SSE lost another 120,000 customers in the first three months of 2014, taking the total number of deserters to 370,000. Meanwhile, SSE increased its full-year dividend 3 per cent to 86.7p a share — representing an £845 million payday for investors.
Retail-profit margins as a share of revenue fell from 4.2 per cent to 2.9 per cent in 2013/4, but because of the decision to freeze prices — as well as rising costs — SSE’s margins will not recover before 2016/17 at the earliest.
The company called on the Government to help it cut bills by up to £200 by 2020 by ending the practice of levying policy costs on energy bills.