SSE, Innogy to merge UK retail
UPDATE: Agreement to combine supply businesses into standalone entity
SSE and Innogy have entered into an agreement to combine the two companies’ retail businesses in the UK to form a new independent supplier.
The merger of SSE’s supply arm with Innogy’s npower subsidiary is subject to shareholder and regulatory approvals and is expected to be completed by the last quarter of 2018 or first quarter of 2019.
“This transaction will create an efficient new independent energy supply and services business in Great Britain and help create a new market model by combining the resources and experience of two established players with the focus and agility of an independent supplier,” the companies said.
The two businesses had about 11.5 million customers between them as of 30 September.
SSE chief executive Alistair Phillips-Davies said: "We are very proud of what we've delivered as a group over many years; but we have been and remain committed to taking the right decisions in each of our businesses to secure the right outcomes for energy customers and other stakeholders.
"The scale of change in the energy market means we believe a separation of our household energy and services business and the proposed merger with npower will enable both entities to focus more acutely on pursuing their own dedicated strategies, and will ultimately better serve customers, employees and other stakeholders.”
SSE reported adjusted profit before tax of£586.2m in the first six months of the 2017-2018 financial year, down 13.9% on the £637.2m posted in the same period last year.
The fall was mainly down to a drop in profit from the company’s networks business, which was £355.1m in the first half of the year, compared with 455.9m last year.
However, adjusted operating profit at SSE’s wholesale unit was up to £159.9m from £121.0m.
The increase was down to improved financial performance and higher output from renewables and gas-fired generation.
The company said some 405MW of new onshore wind energy capacity was added in the first half of the year, with a further 591MW of on- and offshore projects under construction.
SSE said it was focussed on delivering potential offshore projects, such as Seagreen and Dogger Bank, and is “committed to preparing effectively for future competitive auctions for capacity to build offshore wind farms”.
It is also “actively maintaining potential opportunities in onshore wind”.