SSE sheds 300,000 customers

Big six energy supplier SSE lost 300,000 gas and electricity customers in Britain and Ireland in the nine months to 31 December 2015, with accounts falling from 8.58m to 8.28m, according to a trading update issued this morning (28 January).

The supplier, which also announced plans to cut gas tariffs by an average 5.3 per cent, is on target to deliver adjusted earnings per share of at least 115p for 2015-16, and still expects to report an increase in the full year dividend for 2015-6 at least equal to RPI inflation.

SSE estimated that its household customers’ average electricity consumption fell three per cent in the period, while their gas consumption remained steady. Its homes services customers rose in the period by 14 per cent to over 390,000. SSE installed 135,000 smart meters in the period.

SSE said the number of power cuts per 100 customers had fallen in its network businesses, dropping from 53 to 49 year-on-year for Scottish Hydro Electric Power Distribution, and from 46 to 34 for Southern Electric Power Distribution.

The company said it would shortly complete an analysis of market conditions and options for the future operation of power generating plant.

Chief executive Alistair Phillips-Davies said: “SSE continues to fulfil its core purpose of providing the energy people need in a reliable and sustainable way. I am pleased that we have been able to announce a reduction in retail gas prices – our third consecutive reduction in household energy prices – and to achieve a significant reduction in the number and duration of power cuts experienced by our networks customers.

“Market conditions, however, continue to be challenging. Nevertheless, SSE remains a resilient and diverse business, with a strong commitment to operational efficiency and delivering value for customers and investors. It remains firmly focussed on delivering this year’s financial objectives and making sure that the business is fully prepared for the future.”

A note on the trading update from analyst Whitman Howard said: “SSE’s shares have been relatively poor performers since that start of 2016 and, particularly if one bears in mind that we estimate that c50 per cent of its operating profit will be produced by price regulated activities (networks) in the current year and in FY 16/17E.

“Hence, we find this poor share price performance slightly surprising. The shares have had a small bounce over the past few days, but we still see total return upside of 14 per cent at present levels. Given the relatively benign trading statement, we still see the potential for some continued share price recovery in the short term given the current turbulent stock markets.”