New supplier to emerge from SSE, npower merger

Two of the ‘big six’ energy suppliers, SSE and npower, have announced their intention to merge parts of their businesses to create a new independent energy supplier. More formally, the board of SSE has entered into an agreement with innogy in respect of a proposed demerger of SSE’s household energy and services business in Great Britain, and in combination with innogy’s subsidiary npower Group to form a new independent UK incorporated company to be held by SSE shareholders and with minority participation by innogy.

According to SSE: ‘this transaction will create an efficient new independent energy supply and services business in Great Britain and help create a new market model by combining the resources and experience of two established players with the focus and agility of an independent supplier.’ The transaction is expected to be completed by the last quarter of 2018 or the first quarter of 2019. The two existing businesses currently provide energy and related services to around 11.5mn customer accounts throughout Great Britain.

Commenting, Professor David Elmes of Warwick Business School said: ‘Being an energy supply company in the UK has become a tough business to be in and so it’s not too surprising that some companies are taking the decision to exit the market. We have just had another government review aiming to recommend ways to keep energy prices as low as possible. While it makes sense as part of the government’s Industrial Strategy to keep energy costs reasonable for companies and consumers, there comes a point where companies who have the choice of investing in the UK or elsewhere see the UK as a tough market to compete in.’

• Meanwhile, Scottish Nationalist Party leader Nicola Sturgeon has confirmed that the Scottish government is to set up a publicly-owned, not-for-profit energy company which will use power generated from renewable sources.