RESPONSE TO OFGEM'S ESTIMATE OF SUPPLY MARGIN

RNS Number : 2072Q

SSE PLC

14 October 2011

 



SSE plc

RESPONSE TO OFGEM'S ESTIMATE OF SUPPLY MARGIN

SSE does not recognise in any way Ofgem's 'snapshot estimate' that the net margin on supplying a dual fuel domestic customer is approximately £125.

The approach adopted by Ofgem in calculating this figure is entirely theoretical and does not reflect how a responsible energy supply business manages its energy procurement strategy in reality.

This is demonstrated in the way Ofgem's net margin estimate has varied so much during the last 12 months. In June 2011, Ofgem's number was £15, in March 2011 it was £75, in December 2010 it was £90 and in September 2010 it was £65.

The 'snapshot estimate' needs to be compared against SSE's Consolidated Segmental Statement for the last financial year, which reported a profit for supplying domestic customers of £266 million, which equates to around £62 or 6% per dual fuel customer.  SSE does not expect this margin to change significantly for the current financial year as a whole, although it has already said that its financial results for the first half will be 'substantially lower' than last year.

As part of its drive to build trust in energy supply, SSE has committed to publish on each customer's annual statement the cost breakdown of a typical customer's bill, including any profit.

 

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