SSE has revealed that it’s in talks with rival Npower about a potential multi-billion pound merger, but will need clearance from the Competition and Markets Authority.
The Scottish energy supplier said it was in “pre-notification discussions” with the watchdog to investigate the proposed merger after MP’s raised concerns over Britain’s Big Six being reduced to just five.
The news comes after SSE posted a third quarter trading update to 31 December, while the company also expects its capital investment for 2017/18 is expected to be £1.6 billion, down from £1.7 billion.
Alistair Phillips-Davies, Chief Executive of SSE, said: “SSE is a business designed for the long-term. In a changing and challenging energy sector we continue to focus on operational efficiency, disciplined investment and maintaining a balanced range of energy businesses. Throughout this financial year, we have sought to continue to deliver the best possible service for our Networks and Retail customers.
“As we acknowledged in our interim results in November, the operating environment presents some challenges. The period since our interim results has featured volatile wholesale energy market conditions and, during November and December in particular, a period of relatively dry and still weather leading to low output of renewable energy. This did, however, allow good progress with our large construction projects. Political and regulatory scrutiny of the sector has also continued.
“Despite these issues, and several persistent uncertainties in aspects of the operating environment, SSE is well placed. Our fundamental strengths and opportunities for growth mean SSE is on target to meet its first financial objective of an increase in the full-year dividend, at least in line with RPI inflation.”
SSE said its plans to create a new independent energy supplier remain on track to be completed by the last quarter of 2018 or the first quarter of 2019.
George Salmon, senior analyst at Hargreaves Lansdown, added: “Solid delivery so far this year has helped the group upgrade profit forecasts, and there’s also good news on 2017/18 investing requirements.
“Long-term capex guidance is unchanged, but for this year at least, more coming in and less going out is a nice combination.”