Speculation has been rife about the future of the SSE/Npower retail merger since news emerged on Friday.
While some industry analysts denounced the hold-up as “a shambles” (with the deal previously considered imminent but now unlikely to complete until the first quarter of 2019), another commentator was excitedly sounding the death knell for the entire energy retail market.
Official explanations that “adverse UK market developments” and “regulatory interventions” (such as the long-anticipated price cap) were having a “significant impact” on the outlook for the combined company did little to quell the noise.
Yet just how accurate the criticism is about the proposed merger remains unclear.
Should we really be so surprised that those behind a major transaction between two big six giants in a relentlessly volatile marketplace are taking stock?
Certainly, cooler heads that Utility Week spoke to this week were viewing news of the delay as far less apocalyptic – logical even – at what is effectively a staging post in the process of understanding what the energy market is becoming.
And while they accept the default tariff’s ceiling price came as no surprise, it was only once the figure was confirmed that a new certainty arrived, along with a need to reassess.
Could this purely be a sensible checking exercise, then, an example of due diligence on behalf of shareholders? And has the reaction of some sector watchers been overblown?
Possibly, possibly not. The erratic behaviour of SSE’s share price on Friday highlighted the significance of the development in a deal being watched closely by the whole industry.
The price cap news will have provided further clarity or confirmed worst fears. Either way, we have now begun the difficult process of living in a new price-regulated market.
Whether an incumbent supplier or an insurgent brand, companies will need a thorough understanding of what this all means in terms of opportunities and risks if they are to make appropriate decisions.
For two merging giant retailers, with reassessment happening on both sides of the arrangement, it was always going to be complicated. Are Innogy and SSE simply having to look a lot more closely than others?