SSE warns about uncertainty after EU vote

Perth-based energy giant SSE has warned it may face increased risk to its investment outlook if the EU referendum results in “a prolonged period of uncertainty about the legislative or regulatory framework that SSE operates within.”

SSE said the result of the EU referendum will present no immediate risk to how SSE serves its customers or to the investment that it continues to make.

“The level of risk may, however, increase if, following the referendum, there is a prolonged period of uncertainty about the legislative or regulatory framework that SSE operates within,” said the company.

SSE said that regardless of the outcome of the vote, it agreed with the UK Government that collaboration with other European countries on energy matters is important for UK consumers.

“Energy is a ‘shared competence’ and while member states can determine how they best use their energy resources, participation in the ‘Internal Energy Market’ has been beneficial to UK customers and assisted efforts to achieve secure, affordable and low-carbon energy,” said SSE.

“Equally, SSE recognises that it is possible for a country to participate in the Internal Energy Market while not being in the EU.

“In summary, therefore, as its Annual Report 2015 made clear, SSE already recognises political and regulatory change as one of its principal risks and prolonged uncertainty following the EU referendum would add to that risk; at the same time, SSE will not take a view on whether the UK should ‘Remain’ or ‘Leave’.”

SSE’s comments came in a financial outlook statement ahead of the publication on May 18 of its annual results for the year to March 31.

It said it expects to deliver “an increase in the full-year dividend that is at least equal to RPI inflation, currently expected to be around 1%” — and deliver adjusted earnings per share of between 117p and 119p.

SSE expects that its adjusted net debt and hybrid capital will be around £8.5 billion at March 31, 2016, compared to £7.9 billion at September 30, 2015. 

Gregor Alexander, finance director of SSE, said: The operating environment remains challenging, due to factors including falling commodity prices and increased retail market competition, and the Competition and Markets Authority’s Provisional Decision on Remedies represents a substantial and in places challenging package. 

“Nevertheless, completion of the CMA investigation and the UK government’s consultation on the future of the electricity Capacity Market imply progress towards a more settled regulatory and policy framework within GB. 

“This suggests a more encouraging environment in which to head into the new financial year, and SSE will continue to be focused on delivering for both its customers and shareholders.”  

SSE said it expects to report that all three of its segments — wholesale, networks and retail – have been profitable during 2015/16.