SSE and Innogy consider selling retail arms
With price cap on the horizon, SSE supply business is reportedly viewed as “more trouble than it’s worth”
SSE and Innogy are considering selling off their retail businesses to focus on renewables and networks, news outlets have reported.
The reports come after the government published draft legislation last month to introduce a price cap on standard variable tariffs.
Financial sources quoted by the Telegraph said SSE is considering either selling its customer accounts to another supplier or spinning off the business into a separate company to avoid having to deal with a price cap.
“At this stage the business is more trouble than it’s worth,” an investment banker who has reportedly spoken with SSE executives told the paper.
Innogy is also weighing up the possibility of selling its loss-making UK retail business Npower or merging it with a rival supplier, according to sources quoted by the news agency Reuters.
“Management is no longer willing to accept the losses,” said one contact. “A partnership is the only thing that makes sense.” They claimed other suppliers are mulling over similar options.
“The British retail energy market is ripe for consolidation,” added another of the sources.
SSE and Innogy both declined to comment on the reports.
Innogy was spun-off from parent company RWE and has operations in renewables, networks and retail. RWE retains a 76.8 per cent stake in Innogy, which was floated on the Frankfurt stock exchange in October 2016.
The Business, Energy and Industrial Strategy committee is currently gathering evidence as its prepares to undertake pre-legislative scrutiny of the government’s price cap bill.