SSE to offload home energy business by mid-2020
The Big Six supplier lost 570,000 domestic gas and electricity customer accounts in 2018-19.
Energy giant SSE has pledged to offload its under-pressure energy supply business by mid-2020 after shedding more than half a million customer accounts.
The Big Six supplier vowed to sell or float the energy services arm by the second half of 2020 and has appointed a separate board for the division, which will be headed by executive chairwoman Katie Bickerstaffe.
It comes after SSE and rival npower called off their merger late last year, blaming tough market conditions and the Government’s price cap.
Our financial results clearly fell well short of what we hoped to achieve at the start of the year Richard Gillingwater, SSE chairman
SSE’s energy services business – which is now reported separately to the wider business – saw underlying earnings crash 68% to £89.6 million in the year to March after losing around 570,000 domestic gas and electricity customer accounts, to 5.78 million.
The group was also hit by Ofgem’s move to cap the price of poor value standard variable tariffs.
SSE admitted results for the wider business, not including energy services, “fell well short” of its hopes and warned 2019-20 earnings will also be hit.
The group’s annual underlying pre-tax profits slumped 38% to £725.7 million.
It said the new financial year will be knocked by factors such as output from its renewable electricity generation being hedged at below current market prices.
SSE also set a deadline for its chairman Richard Gillingwater’s departure, saying he will continue in his position until no later than March 31, 2021.
Mr Gillingwater said: “While our financial results clearly fell well short of what we hoped to achieve at the start of the year, we’ve made significant progress towards our ambition to be a leading energy company in a low-carbon world.”
SSE also said despite intense switching in the domestic supply sector, it was seeing “early indications” of consolidation as swathes of smaller players have fallen foul of wholesale energy increases and “unsustainable business models”.
It said 12 suppliers ceased trading in 2018-19 and had to be taken on by regulator Ofgem’s “supplier of last resort” process.
The figures follow a tough year for SSE following the collapse of its npower merger.
It was also fined £700,000 by Ofgem in April for missing last year’s target to install gas smart meters for customers.