Energy Firm SSE Defends 38% Profits Rise
The energy firm SSE has defended a 38% rise in half year profits at a time when its gas and electricity bills are rising by 9% on average.
The company, formerly known as Scottish & Southern Energy, made an adjusted profit before tax of £397.5m in the six months to September 30.
SSE's retail business, which supplies electricity and gas to homes and businesses, reported an operating profit of £75.7m for the first-half after posting an operating loss of £101.4m a year ago.
Lord Smith of Kelvin, the firm's chairman, said: "While some observers may choose to criticise SSE for making a profit and paying a dividend (of 25.2p per share - a rise of 5%) 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."
In August SSE, which trades as Southern Electric, Swalec and Scottish Hydro and is the UK's second-largest generator of electricity, became the first of the so-called 'big six' energy firms to announce inflation-busting increases to household bills.
It blamed "sustained increases" in the cost of using the electricity and gas networks, costs associated with mandatory Government schemes and the price it had paid for energy in the wholesale markets for the 9% rise, which came into effect last month.
Wholesale gas charges had risen 14% year-on-year, the group said and its bill increase would add another £8.53 a month on to the typical monthly direct debit, dual fuel customer - taking the average annual bill to £1,274.
In its statement today SSE said that despite the rise its retail profit margin was just 1.5%.
"The prices achieved for generating electricity have been weak and higher gas and non-energy costs unfortunately had to be reflected in the increase in household energy prices."
Adam Scorer, Director of Policy and External Affairs at Consumer Focus, suggested energy firms only had themselves to blame for criticism of profits.
"The furore over wholesale costs, energy pricing and company profits has deepened consumer distrust in the energy industry.
"Energy companies need to make profit so they can invest in our energy infrastructure. But if confidence is to be rebuilt in this market, the information that 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's share price opened up slightly when trading began on the FTSE 100.
At the same time, rival npower - another of the 'big six' confirmed an operating profit - a different measure to that of SSE - of £238m for its first nine months.
That represented a 2% fall on the same period last year, the company said.