SSE (LSE: SSE) confirmed that it remains on course to deliver a full-year dividend increase above RPI inflation for 2013/14 and future years.
Also revealed in the interim statement for the three months to 30 June 2013 was that the number of electricity and gas customer accounts fell slightly from 9.47m to 9.46m, and the consumption of electricity also dropped to 920kWh from 940kWh last year. Gas consumption remained unchanged at 96kWh.
Total electricity output was up by 14% to 2,219GWh from gas- and oil-fired power stations, with the Medway station back in service, and down by 4% to 3,569GWh from coal-fired power stations. Encouragingly, renewable resources provided 32% more electricity than last year at 1,756GWh.
SSE had already set out its investment plans in its annual report with around £1.5bn to be ploughed into 2013/14. In the first quarter, the transmission network upgrade has been completed by SSE’s subsdiary Scottish Hydro Electric Transmission, the Calliachar wind farm has been introduced and the 460MW combined cycle gas turbine foundations have been laid in the South-East of Ireland. Additionally, Galloper offshore wind farm has received development consent.
Other developments of interest since the financial statements were released include the launch of a seven-year €600m euro bond and a detailed plan to deliver a 10% price cut to distribution network costs for customers in central southern England and the north of Scotland in 2015. Additionally, SSE made payments to 9,000 of 16,000 customers affected by its previous dubious sales techniques amounting to £675k of the £5m set aside.
Retail Market Review
SSE like all the energy companies will be affected by Ofgem’s review of the retail market. From August 2013, there will be a limit of four tariffs per fuel type and standards of conduct will be tightened to produce a ‘simpler, clearer, fairer’ retail energy market. SSE claims it has already reformed substantially and is in a good position, but that the recommended changes will still add cost and complexity that will affect customers.
SSE decides not to reveal any financial performance in its quarterly review so we must wait until the half-year results to September. The focus in the interim statement is purely on the dividend metric. As an investor, more information is always better and I would like to see SSE being more open given the ease of financial reporting now.
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> Barry does not own shares in SSE.
