SSE Fitch rating of A- remains unchanged following Ed’s energy freeze
The ratings agency Fitch Ratings has today affirmed utilities company SSE the Long-term Issuer Default Rating (IDR) of 'A-' with a Stable Outlook.
This comes after Ed Miliband's price freeze announcement last week; the A- rating signifies that economic situation can affect the finance of a company, but is an unchanged rating for the company.
Morning Wire's Suzie Neuwirth writes earlier today:
ENERGY companies are in advanced talks with the government to delay the start of a costly energy-saving scheme, as they argue that implementing it too quickly will cause customers’ bills to rise.
A spokesperson from SSE told Morning Wire yesterday that the big six energy suppliers thinks an 18-month delay would be sensible to avoid a steep price increase.
British Gas owner Centrica is also requesting more time to meet the targets to avoid passing costs on to consumers, according to the Daily Telegraph.
The Energy Companies Obligation (ECO) scheme was established in January 2013 and mandates companies to install a target number of energy-saving measures in customers’ homes by March 2015, or face hefty fines.
It is understood that the government is open to the industry’s requests to extend the scheme.
But Fitch have highlighted the stability of the company, saying:
The ratings affirmation reflects SSE's largely regulated and resilient cash flow profile as well as stability and visibility for the remainder of the electricity distribution, electricity transmission & gas distribution price controls, though the former may change after April 2015. While SSE utilises all its gearing headroom, a third of capex is uncommitted and scrip dividends alleviate cash flow pressure supporting the Stable Outlook despite pressures in thermal generation. SSE is well funded for FY14.
Back in April, the company was slapped with a £10.5m fine by Ofgem for protracted mis-selling to customers.