70% of household energy customers would be affected by Tory price cap, warns SSE

Updated: 

Gas and electricity giant SSE has revealed 70% of its household customer accounts would come under the scope of the Conservative's energy price cap pledge as it warned against the "unintended consequences" of the move.

The Big Six provider said 4.76 million of its 6.76 million UK domestic customer accounts could be affected by a cap on standard variable tariffs (SVTs).

SSE joined rivals in raising fears over the Tory election campaign promise, saying it posed a risk for the company and other suppliers.

It added: "SSE would caution against potential unintended consequences of any proposed intervention in what is a rapidly changing and increasingly competitive market."

The comments came as it posted full-year figures showing a rise in profit margins at its UK household supply arm despite shedding 210,000 household and business customer accounts.

SSE, which raised dual fuel prices by 6.9% on April 28, said UK and Ireland customer accounts fell from 8.21 million to 8 million in the year to March 31 as it faced competition from smaller rivals, but insisted it was beginning to halt the exodus.

It said: "While any loss of customers is disappointing, this represents the smallest decline in SSE's customer numbers since 2013, due to the impact of efforts to improve retention and attract more new customers to SSE."

Profit margin per dual fuel household customer - a key measure in the industry - was around 6.9% against 6.2% the previous year.

This helped lead to a "small overall" rise in annual underlying earnings at its household supply arm, although it said adjusted operating profits fell 2% overall in the energy supply division, to £389.5 million.

The wider group posted a 2.1% rise in annual underlying pre-tax profits, to £1.55 billion

Bottom line pre-tax profits jumped to £1.8 billion from £593.3 million, although the previous year's results were hit by large write-downs on some of its assets.

Shares in SSE and British Gas owner Centrica have been hit hard since the Tories first confirmed the price cap plans last month.

SSE shares were down another 1% after its results.

Fellow providers E.ON, Centrica and ScottishPower have also spoken out against the proposals, warning that it could lead to higher bills for consumers and reduce competition.

But Prime Minister Theresa May has said 17 million households will benefit by up to £100 from the cap on poor value SVTs.

Under Labour's election manifesto, it would not nationalise the existing Big Six companies but would take the National Grid into public ownership and provide facilities for the establishment of regional companies along the lines of Nottingham's council-backed not-for-profit Robin Hood Energy.