Energy provider SSE has finally done a deal to get rid of its household energy supply business. This will leave SSE focused on renewables and energy networks.
“Its retail customers will hope that new owner OVO offers a good level of customer service as historically SSE has scored well on customer satisfaction relative to the other large energy suppliers, according to a GfK survey in 2018.
“SSE’s shareholders will also have their fingers crossed that a tighter business focus will result in better returns for their investment as the energy company’s share price has been very volatile in recent years.
“Investors were dealt another blow earlier this year with a cut to the dividend, with inflation-linked income growth having previously been a core reason why so many people owned the shares in the first place.
“SSE’s annual dividend growth streak had stretched all the way back to 1992 so this year’s decision to slash the pay-out was particularly brutal for its investors. However, changes to the group structure and tough trading conditions meant that it was the right thing to do.
“In May chief executive Alistair Phillips-Davies forecast an improvement in underlying profits but cautioned that progress would be restrained by the timing of profits in Electricity Networks and effect of hedging at the Renewables operation, which would limit the price received for the energy generated at levels below prevailing market rates.
“This followed last year’s profit setback when the hot, calm summer hit SSE’s wind business and forced the firm to buy power in the open market to compensate for the renewables shortfall. That drove the Energy Management unit into loss.
“SSE has now guided that the dividend for the current financial year won’t be affected by the OVO deal. This will be a relief to shareholders, so too news that it is still expecting to increase the dividend by the rate of RPI inflation for the subsequent three years.”