SSE to Stop Supplying Household Energy Next Year
Big Six energy supplier SSE has announced it will stop supplying gas and electricity to domestic customers in the UK from the middle of next year.
The energy giant, which has over 6 million UK domestic customers, has blamed increased competition in the energy market, rising wholesale costs and the introduction of the government’s energy price cap as reasons for offloading its energy supply business. The Scottish-based supplier said it will either sell its energy services business by mid-2020 or list it as a separate company.
The announcement comes after figures from its latest annual results revealed that pre-tax profits in the year to March 2019 were just £725.7 million, down 38% from the £1.2 billion profit made in 2017-18. Its actual earnings also fell by 68% down to £89.6 million.
The reason for the huge fall in profits is partly down to the fact that SSE lost over half a million customers over the last year. In the year to March 2019, the firm went from having 3.82 million domestic electricity customers down to 3.46 million. The number of domestic gas customers on SSE’s books also fell from 2.53 million to 2.32 million. In total, around 570,000 domestic customers closed their SSE accounts in the last year.
There had been signs before this that SSE was looking to sell its energy supply business. In December 2018, the firm called off a planned merger with fellow Big Six supplier npower amid ‘challenging conditions’, due to increased market competition and the upcoming energy price cap. And there were reports in April 2019 that SSE was discussing a potential £1 billion sale to broadband provider TalkTalk. The firm has said it will continue to be a forerunner in the development of renewable energy.
“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,” said Richard Gillingwater, chairman of SSE.
“We have continued to develop our core businesses of regulated energy networks and renewables; demonstrated our ability to create and unlock value from developing and operating, as well as owning, assets; and adopted clear long-term goals as we set up the business for long-term success. The fundamental strengths of our business and the strategic opportunities afforded by the transition to a low-carbon economy will support the delivery of our five-year dividend plan and creation of value for society as a whole.”
SSE is not the only energy supplier in the UK to be struggling in recent months. According to Energy UK, a record number of energy switches took place in April this year, with 47% of the 668,371 switches moving from one of the Big Six to a smaller energy supplier. British Gas recently announced it had lost 234,000 domestic customers in the first four months of the year, with npower also announcing it had lost 103,000 customers in the first three months.