Today’s interim results statement is mainly aimed at shareholders, investors and analysts. As a UK company, listed on the London Stock Exchange, we have to set out the details of how the company has performed over the first six months of the year, the profit or loss made in each part of the company and how our investment in upgrading the country’s electricity system is going.
But there’s another group of people I’m keen to talk about in all of this to: our customers. Some politicians and media commentators have claimed recently that we value our shareholders more than our customers. Or to put it another way, we’re focussed on paying them a dividend on their shares, regardless of what that means for our customers.
Nothing could be further from the truth.
SSE needs and cares about customers. Without customers, there would be no SSE for shareholders to invest in. Think about it for a second; if we had no customers we’d have no one to sell our products and services to. Likewise, without the investment made by shareholders we couldn’t afford to build the infrastructure or buy the equipment needed to deliver what customers need: sustainable supplies of energy they can rely on.
There’s one number in today’s statement that I’m keen that our customers are told about and understand: the £115m loss in Energy Supply, the part of the company that sells electricity and gas to domestic customers and for which I’m responsible.
When we announced our tariff changes last month we explained that there are three reasons for it: the rising price of energy on the global wholesale markets, the rising cost of delivering energy to customers’ homes and the increasing cost of government environmental and social schemes. These factors make up 85% of the bill and they are all increasing, leaving us with no choice but to increase our prices. Even so, we do not expect our profit margin in our Energy Supply business to exceed five pence in the pound.
The fact that we made a loss in Energy Supply in the first six months of the year shows the effect that these rising costs are having on our business. While it’s normal for our Energy Supply business to make less money in the warmer summer months than the colder winter months, a loss-making business is not a sustainable business. In short, the loss made by the Energy Supply business shows that we have not been overcharging our customers. And although we regret having to increase prices, it was unavoidable.
But there is another way that customers’ bills can be reduced - by removing the government social and environmental levies from customers’ bills and funding them through general taxation. If the Government did this, it would remove £110 from typical bills, rising to £200 by 2020 - and also move the burden of paying for these schemes away from those who can least afford to pay onto those who can afford a little more. It is encouraging that the Government is now looking at this.
Given the political and media interest in the energy industry at the moment, SSE’s results statement is likely to receive a lot of attention. Whatever else is said and written about it, I want our customers to understand that SSE is working hard for them: to deliver the energy they need in a reliable and sustainable way; to deliver the best customer service in the industry; and to keep the bills they actually pay as low as possible.
And I want every one of our customers to know one other thing: that they should never have to make the choice between heating and eating in this or any other winter. If they feel they are being faced with that choice, they should get in touch with us as soon as possible. We employ thousands of people in Basingstoke, Cardiff, Cumbernauld, Havant, Perth and, for our customers in Ireland, Belfast and Dublin, who have a clear mandate to help customers who are in need.
Today SSE has some important things it must say to shareholders and investors. But I want to help our customers understand that our focus is on them – today and every day.