SSE share price edges down as it announces plans to close Ferrybridge power station
The figures
Being an energy giant isn't always easy these days – but results posted today showed profits before tax at SSE rose 24 per cent in the year to the end of March to £735.2m, from £592.5m the year before, although operating profits stayed flat, at £1.88bn.
But the government's push to persuade energy customers to shop around more has clearly taken its toll – customer numbers fell by half a million to 8.58m, from 9.1m the year before.
Although it announced an increase of two per cent in its full-year dividend to 88.4p per share, investors weren't that impressed: shares fell 1.2 per cent to 1,675p in early trading.
Why it matters
Having been attacked by politicians of all stripes in the run-up to the election, the "Big Six" energy suppliers haven't fared well in recent months, with bargain-basement oil prices and general customer malaise weighing on their profits. In January, SSE – along with all its rivals – bowed to political pressure and announced plans to cut household gas prices by 4.1 per cent.
Read more: These are Britain's most complained-about energy suppliers
Today SSE said the volatility of global energy markets had created knock-on impacts for UK markets – "most notably the fall in the global oil price", which has created downward pressure on commodities.
It added that after a review of its (two) coal-fired "generation assets" (aka "power stations"), it will put Ferrybridge Power Station in West Yorkshire out of its misery by March next year.
"Both SSE's coal-fired power stations are approaching 50 years old and require increasing levels of capital expenditure to maintain safe and reliable operation," it said.
The plant employs 172 people, but it said it plans to "redeploy" many some of those to other areas within the group, including Keadby power station, which is being bought our of "deep mothball".
"SSE will also offer employees voluntary release on enhanced terms, and seek to avoid compulsory redundancies," it said.
What SSE said
The company's chairman, Lord Smith of Kelvin, said:
The 2014/15 financial year was expected to present a number of major challenges, and it certainly did. Politics and regulation loomed large with the first-ever auction for electricity generation capacity, the CMA investigation into the energy market, final proposals from Ofgem on the eight-year price control in electricity distribution and the extended build-up to the recent UK general election.Market conditions for thermal power stations have been persistently difficult, requiring us to take the difficult decision we have announced this morning to end coal-fired generation at Ferrybridge power station by next March; the new price control in distribution is driving significant change; and energy supply has once again proved to be a highly competitive business.
In short
With political pressures and plunging oil prices, it's not an easy time to be an energy company, so its hardly surprising operating profits were flat.