GMB urges Clark to block SSE-Npower merger

GMB, the union for energy workers, has called on Greg Clark, the UK’s Secretary of State for Business, Energy and Industrial Strategy, to block the proposed merger of energy companies SSE and Npower.

Perth-based energy giant SSE said last week it agreed to demerge its household energy and services business in Great Britain with Innogy subsidiary Npower Group plc to form a new listed UK company.

The combination, if allowed, would create the UK’s second largest energy supplier with around 11.5 million customer accounts, making the new firm second only to Centrica’s British Gas which has more than 14 million customer accounts.

The GMB is arguing that “turning the big six energy providers into the big five would create a chokehold that is bad for customers, workers and the wider economy.”

A letter from the GMB argues the proposed merger “meets all the criteria for a referral to the Competition and Markets Authority for investigation” but if they do not initiate investigations then the Department for Business, Energy and Industrial Strategy (BEIS) should use its powers under the Enterprise Act 2002 “to block it on the grounds of public interest.”

Justin Bowden, GMB National Secretary for Energy, said: “This is an obviously worrying time for SSE and Npower employees who will be concerned that job cuts will inevitably follow a merger.

“However, any merger should also be a worrying development for the Government.

“Professor Helm, in his Cost of Energy review, found that despite technological advances, and the benefits that market forces were supposed to deliver, ‘prices have gone up, not down, for many customers.’

“The creation of a Big Five will only exacerbate a situation that is already failing consumers and reduce further what little competition currently exists.

“Should the merger be allowed to proceed, then it will lead to the ‘cartelisation’ of a market that will be without competition, effective oversight or strong central direction.

“The Helm report was clear: it is for the Government to set out an energy policy to guarantee an energy supply that is secure, low carbon and the least expensive without repeating some of the ‘spectacularly bad’ decisions of the past; and, all operators in the sector are effectively contractors, and consequently Ministers have a duty towards the sector beyond that owed to other industries that are genuinely outside of the Government’s control and direction.

“We are at a genuine crossroads in terms of the UK’s future direction for its energy strategy and policy for at least a generation to come.

“The merger between SSE and Npower is a test of that duty and until there is a settled energy policy, we risk a private cartel if the merger is given approval.

“GMB urges the Secretary of State to exercise existing powers to prevent yet more needless price hikes that are the penalty for a dysfunctional energy market.”