Big six energy giant SSE caused an uproar yesterday when it announced plans to freeze energy prices until 2016 – but slashed investment in a host of renewable energy projects to fund it.
It also said it would cut 500 jobs from its 20,000 workforce to meet the expected £100million cut in profits and keep bills at the same rate.
Six months ago, SSE criticised a pledge by Labour to force suppliers to freeze prices, saying it would lead to “unsustainable loss-making retail businesses”.
Energy Secretary Ed Davey yesterday welcomed its apparent U-turn and pressed the company’s rivals to do the same.
He said: “SSE have shown that the big energy firms are able to cut their costs and profits, and be confident about their ability to weather potential uncertainty in the wholesale markets, to give bill payers long-term price security. Customers of the others will be asking whether their suppliers will do the same.”
But the move dealt a significant blow to Britain’s renewables industry by reducing SSE’s commitment to a range of projects, including the recently approved Beatrice offshore windfarm.
SSE said it would cut its stake in the £3billion Moray Firth project from 75% to 50% – just days after the Scottish Government gave the plan the go-ahead. It said it would continue to fund its reduced stake in Beatrice but had pulled out of a range of renewables projects, including a 690mw offshore windfarm off Islay.
Renewables organisations blamed Westminster for the withdrawal, saying delays in announcing the price the UK Government would pay for offshore energy was at the heart problem.
Renewables UK chief executive Maria McCaffery said: “This announcement demonstrates very clearly the need for the government to provide greater confidence for investors in its long-term support for Britain’s offshore wind industry.
“The lack of clarity about the government’s support for offshore wind past 2020 is in stark contrast to its support for nuclear where they’ve set out a clear package of financial support.”
Meanwhile, the FTSE 100 firm is carrying out a “legal separation” of its wholesale arm – which includes energy production and storage – from its retail division selling energy to homes and businesses.
SSE chief executive Alistair Phillips-Davies said: “We’re setting out a positive agenda for customers, including our price freeze to 2016, we’re making sure our own house is in order for the future by streamlining and simplifying our business and we’re making clear we wish to work with people to find more ways of taking costs out of energy bills.
“In all of this, I hope that people will see a company like SSE not as part of the problem but as part of the solution.”