SSE set for £1.54bn energy profits

Energy giant SSE said it was on course to pump up profits to £1.54 billion this year and increase payouts to shareholders, two months after announcing a sharp hike in customer tariffs.

The announcement is likely to spark fresh anger following Labour calls for a cap on household gas and electricity bills as incomes continue to be squeezed.

SSE, which trades as Southern Electric, Swalec and Scottish Hydro, raised tariffs by an average of 8.2% from November, blaming Government green levies as well as rising network costs and wholesale energy prices.

Bills will be cut by 3.5% for all of the group's nine million residential customers from March 24 after the group passed on savings from the Government's green levy shake-up but it still means an overall above-inflation rise for hard-pressed households.

In a trading update, SSE's chief executive Alistair Phillips-Davies said that despite the "difficult business environment", it was encouraging that the group was on course to deliver more profits and cash for shareholders.

It said its full-year dividend would be up by 3% and its adjusted profit before tax for the year ending on March 31 was likely to rise in line with market expectations to £1.54 billion - an increase of 8.8% on 2012/13.

This was despite the number of electricity and gas customer accounts in Britain and Ireland falling from 9.47 million to 9.22 million, while average consumption of electricity in Britain fell by 4.3% and gas by 9.5% - when comparing the nine months to the end of December last year to 2012.

SSE also said there was uncertainty over the future of its investment programme, with the prospects for new power generation assets in Britain "not encouraging". It has argued it needs to make money to fund such projects.

The group said the failure of two offshore wind farm projects it had a stake in to be chosen for a Government investment short-list was disappointing and that it was reviewing its offshore portfolio.

This added to uncertainty about its investment programme in the five years from 2015, which SSE said was likely to be lower than the £1.5 billion - £1.7 billion range invested annually since 2010.

The group's statement also addressed the question of Scottish independence, saying that while it did not have a view on the matter, it reiterated that the uncertainty over the future "increased legislative and regulatory risk".

Meanwhile, the company said it restored electricity supplies to 130,000 homes following storms and flooding before Christmas.

Mr Phillips-Davies said: "Despite what is clearly a difficult business environment, the overall performance of the company has been solid in 2013/14 and the efforts of employees, shown recently in the response to the Christmas week storms, have been excellent.

"It is encouraging that SSE is on course to deliver real growth in the dividend and increases in adjusted earnings per share and adjusted profit before tax."

Mr Phillips-Davies said the Government's decision last month to remove some of the costs of its green policies from energy bills was "an important step in the right direction".

But he said more needed to be done "to shift the full cost burden of environmental and social policies from the energy bill to the taxpayer".

SSE said a shake-up at the top of the company hierarchy will see its management board replaced by a slimmed-down six-strong executive committee.

Shadow energy secretary Caroline Flint said: "Yet again we see an energy company increasing its profits and payouts to shareholders on the back of spiralling bills for hard-pressed consumers.

"The reason the energy companies think they can get away with treating their customers so poorly is because they know David Cameron will never stand up to them."

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