42 Thursday May 26 2022 | the times
Business
Energy giant SSE, which generated
profits of £1.5 billion last year, expects to
make even more this year as the firm
benefits from high prices.
The FTSE 100 group also upgraded
its earnings outlook for the next four
years yesterday, citing higher forecast
inflation and “higher and more volatile
energy commodity prices”. It has been
locking in higher prices for the power
that it sells in advance from its wind
farms and hydroelectric operations.
However, SSE’s chief executive has
played down the risk of the business
being hit with a windfall tax.
SSE’s shares were hit this week by
news that the Treasury was mulling a
windfall tax on power producers. But
Alistair Phillips-Davies, its chief execu-
tive, said yesterday: “I think it’s an issue
about oil and gas producers. I don’t
really see it coming to affect us.”
Nevertheless, he sought to head off
calls for such a levy by insisting that it
was already investing “far more” than it
was making in profit and could invest
more than £24 billion in Britain this
decade, with £10 billion “locked in”.
He called for the government to
maintain “clear and consistent policy”
and warned that “whenever things
change, clearly that will change plans”.
Shares in the company rose by 101½p,
or 5.75 per cent, to £18.67½ yesterday on
£1.5bn
SSE’s adjusted annual operating profit
Energy firm
sees profits
power up on
high demand
the bullish profit outlook and reports
suggesting a windfall tax on electricity
generators had been ruled out for now.
SSE, based in Perth, operates energy
networks, onshore and offshore wind
farms and gas-fired and hydro power
plants. Adjusted operating profits rose
by 15 per cent to £1.5 billion in the year
to March, as higher profits for its net-
works and gas and hydro plants offset a
drop in earnings from its wind farms.
Gas and power prices have soared
over the past year amid a shortage of
gas, exacerbated by Russia’s invasion of
Ukraine. Household energy bills have
jumped to average £2,000 a year and
are forecast to rise to £2,800 in October,
prompting the government to consider
a windfall tax on those benefiting from
the crisis to fund help for consumers.
SSE said that profits from its gas
power plant division jumped by 91 per
cent to £306.6 million in the year to
March, mainly thanks to higher profit
margins during periods of scarce sup-
plies. It also made a £30.7 million profit
from gas storage facilities because of
volatile pricing, compared with a
£5.7 million loss a year earlier.
This helped to offset a 22 per cent fall
in profits to £568.1 million in its renew-
ables business, primarily reflecting
lower proceeds from selling stakes in
offshore wind developments. It was al-
so hit by “exceptionally still and dry
weather in the summer” but benefited
from “strong financial performance
from hydro and pumped storage in
volatile markets”.
Profits in SSE’s electricity transmis-
sion and distribution networks both al-
so increased, thanks to higher regulat-
ed revenues, which are funded by levies
on consumer energy bills.Emily Gosden Energy Editor
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