SSE PLC - Statement re CMA Provisional Findings

[Bouleversee]

I was aware of a cap but assumed it would be on the unit price. However, this is what the linked TMF article says:

"The upcoming price ceiling is set to be introduced at £1,137 per year for customers on a standard variable tariff for electricity and gas. The regulator estimates that around 11m households are currently on one of these default deals, and that the cap will cut overcharging by energy suppliers by a colossal £1bn"

That's crazy. I can see SSE acquiring a lot more SVT customers. I pay £150 per month to Npower on their cheapest fixed (for 3 yrs deal) for both fuels so there would be a big saving if I switched to a standard variable tariff and I wouldn't feel the need the turn off the heating as I have done today. Surely, this can't be correct. Won't it mean that there will be no incentive to use energy sensibly, other tariffs won't be worth having, those on fixed rates will be subsidising the SVT customers and the profits of the energy companies will all plummet?

[escalader]

"The upcoming price ceiling is set to be introduced at £1,137 per year for customers on a standard variable tariff for electricity and gas. The regulator estimates that around 11m households are currently on one of these default deals, and that the cap will cut overcharging by energy suppliers by a colossal £1bn"

This is slightly misleading according to the BBC:

What is actually being capped?
The cap is on the unit price of energy, and the standing charge.
So the cost of electricity - for those on default tariffs - will be capped at 17p per kWh. Gas will be capped at 4p per kWh.
Dual fuel users will pay no more than £177 a year for a standing charge; electricity-only users will pay no more than £83, and gas users £94.

[monabri]

SSE might be the least affected of the big 6 the BBC reported ( link) . A direct debit customer might save £60 pa. At the other end of the scale, Scottish Power customers might save £121 pa. NPower would be the second worst affected....hence my reasoning that Innogy would be eager to parcel nPower off asap.

https://www.bbc.co.uk/news/business-45422218

[monabri]

SSE was reported to have 2.4 million customers on the standard variable tariff.

https://www.uswitch.com/gas-electricity ... e-changes/

[Arborbridge]

I was aware of a cap but assumed it would be on the unit price. However, this is what the linked TMF article says:

"The upcoming price ceiling is set to be introduced at £1,137 per year for customers on a standard variable tariff for electricity and gas. The regulator estimates that around 11m households are currently on one of these default deals, and that the cap will cut overcharging by energy suppliers by a colossal £1bn"

That's crazy. I can see SSE acquiring a lot more SVT customers. I pay £150 per month to Npower on their cheapest fixed (for 3 yrs deal) for both fuels so there would be a big saving if I switched to a standard variable tariff and I wouldn't feel the need the turn off the heating as I have done today. Surely, this can't be correct. Won't it mean that there will be no incentive to use energy sensibly, other tariffs won't be worth having, those on fixed rates will be subsidising the SVT customers and the profits of the energy companies will all plummet?

It cannot be correct. The cap has to be on the unit price otherwise Chatsworth house would only pay £1137 for its heating.

[monabri]

(continuing...after computer issues!)

£60 X 2.4m = £144m revenue reduction. SSE's revenue was £31226m ( March 2018)...so, a possible ' hit' of 0.46%.

[moorfield]

https://www.theguardian.com/business/20 ... he-balance

The Guardian understands the deal is in serious trouble but could still be salvaged if new terms can be agreed.

and

The companies appear to have given themselves a month to fix the crisis – SSE said it would provide an update on the merger in mid-December.

[Dod101]

Arb

This is another share that I have held for around 20 years. Earlier it was producing excellent results and good dividend increases and it was only after the CEO of these days, Ian Marchant retired, or left anyway, that things started to look a bit shaky. He probably saw the writing on the wall. In 2007 for instance they increased the dividend by 18.3% and the cover was 1.68. By 2010 the dividend was increased by 6.1% although the cover had dropped to 1.57. To 31 March 2018, the dividend was increased by 3.7% and the cover had dropped to 1.28.

It is also instructive to compare the style of the Annual Reports. In the old days say up to about 2012, it was all about financial results and dividends. In the last Annual Report it is all about its social purpose, sustainability and carbon footprint. The Chairman does not even mention the dividend is his report. Obviously, as their market has become so much more politically influenced they have had to change their reporting style, but it has not been to the benefit of the shareholders.

I do not know what I bought my shares at as I cannot find the records but even at today's price I will still be ahead.

Dod

[MaraMan]

I have held them for a while, not as long as Dod though, but decided to jump ship. The latest news was the final straw. I think I can find a better home for my money than SSE.

MM

[Bouleversee]

(continuing...after computer issues!)

£60 X 2.4m = £144m revenue reduction. SSE's revenue was £31226m ( March 2018)...so, a possible ' hit' of 0.46%.

If that is the case, today's s.p. drop would seem to be a trifle overdone. It would seem that £1137 p.a. is the cap for a typical dual fuel user, which is rather meaningless, as are all the comparison quotes one gets when trying to decide on tariffs/switching as they are on the same basis. Analysts are lambasting the two companies for causing a complete shambles and say they have no excuse since the cap was threatened ages ago and hasn't changed much from the September proposal. There is a suggestion that between them the two companies might have to inject around £1bn into the new venture. What would that do to the hit, Mon?

[monabri]

65.6% of £1 billion...£656m would be SSE's input based on the percentage of SSE : Innogy in the new company.

This would be in the same ballpark as the current annual dividend.

Questions
How do these anal ysts calculate £1 billion?
Over what period of time?
In what form will the input be?
Do I believe them...are they sensationalising the matter..? ( You recall the rubbish printed about Petrofac?)




p.s I must fix the space bar on my computer