Published: Thu, November 09, 2017
Economy | By Shawn Conner

Energy merger sparks fears over jobs and competition

Energy merger sparks fears over jobs and competition

However, the company has now moved to merge with Npower in the hopes to create a brand new energy supplier. Here are the details so far. Additionally, SSE's second proposal, to Innogy could come to fruit since the German company is seeking an outlet for its surplus business.

SSE has confirmed it is merging its British domestic business with Npower to form a new energy company.

Reported profit before tax plunged 40.4% to £402.2 million, mainly due to SSE's partial equity disposal in October 2016, as well as the phasing of regulatory revenue, sharing of out-performance with customers and the phasing of capital expenditure on significant projects. If approved, it would take the UK's "Big Six" energy providers to the "Big Five", along with British Gas, EDF, E.ON, and Scottish Power.

Innogy SE and SSE plc have confirmed they are in advanced discussions regarding a merger of the retail activities of Npower and SSE's B2C (retail customers) and Energy+ activities in the UK.

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"This is a new and different model which should leave us well placed to challenge the market, respond to the challenges and capitalise on the opportunities that lie ahead".

SSE said the tie-up talks were part of its commitment to embrace change in its operations "adapting them to the political, economic, social and technological requirements of customers and society as a whole".

He said the merger would allow both to "focus more acutely on pursuing their own dedicated strategies".

Innogy and SSE are advised by Goldman Sachs and Credit Suisse, respectively, Terium said. Innogy will hold a minority stake of 34.4% in the combined retail company.

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Innogy will also receive a break fee of £60m if SSE's shareholders fail to approve the deal by 31 July 2018.

Claire Osborne, energy expert at uSwitch.com, said the question for consumers will be whether this new supplier leads to improvements in pricing or customer service.

The deal could fall under the jurisdiction of the Competition and Markets Authority if it progresses beyond its current stage, but Mr Keeling added: "We think it is very good for competition and customers".

Some analysts were not so sure, especially as British Gas and the new company to be formed from SSE and npower would have half the retail market between them.

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"Of the major players, SSE has the highest percentage of customers on these tariffs, so it's perhaps no surprise to see it taking action".

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