SSE warns UK government on windfall tax plan

The chief executive of SSE, the Perth-based renewable energy and power networks giant, has hit out at UK finance minster Rishi Sunak’s plan to impose a windfall tax on electricity generators.

SSE chief executive Alistair Phillips-Davies said that the “unhelpful” threat has harmed investor confidence just as companies like SSE plan to invest tens of billions of pounds into new energy projects in the UK.

Phillips-Davies told London newspaper the Financial Times: “They [the government] used the word extraordinary profits [to justify the proposal].

“Where are these extraordinary profits?

“I’m not entirely sure where the windfall is.

“Given that we have got very well-developed plans to invest lots in [energy] networks, lots in renewable generation, it’s very clear from the share price reaction that they are affecting investor confidence and that is unhelpful for us.”

Sunak confirmed that he also plans to target electricity generators when he announced a new 25% windfall levy on oil and gas producers at the end of May to partly fund a £15 billion package to help households with soaring energy bills.

Describing electricity generators’ profits as “extraordinary” as a result of high wholesale power prices, Sunak said he was considering “appropriate steps” to ensure generators also contributed towards support for consumers.

The plans have wiped billions of pounds off the stock market value of power companies including SSE, Drax and Centrica.

On a visit to Peterhead, where SSE is spending more than £250 million to reinforce the electricity grid to accommodate more renewables projects, Phillips-Davies told the Financial Times the generation sector was “much more complex” than oil and gas.

On May 25, SSE said its investment in Great Britain’s electricity infrastructure system could total in excess of £24 billion this decade as part of its Net Zero Acceleration Programme (NZAP).

The investment news came as part of SSE’s financial results for the year to March 31, 2022, showing profit before tax rose 44% to £3.5 billion.

Adjusted profit before tax was up 23% to £1.2 billion.

SSE is proposing payment of a full-year dividend of 85.7p per share, up from 81p.

SSE is the largest listed company run from Scotland — with a stock market value of about £18.6 billion — and the firm employs about 10,000 people.

SSE is helping develop vast new wind farms such as Dogger Bank off England’s north-east coast, which will be the world’s biggest offshore array when it is finished in 2026.

Asked if any SSE investment projects could be threatened by a windfall tax, Phillips-Davies said SSE would still be able to build the projects in its £24 billion pipeline but warned ministers: “If somebody decides to change tax laws we will have to restructure our projects so they still make money.”