ENERGY giant SSE said annual profits from its energy supply arm fell by nearly a third and are unlikely to recover for two years after it announced a price freeze.
Operating profits from the business dropped by 32.2 per cent to £246m although the wider group saw adjusted pre-tax profits rise 9.6 per cent to £1.55bn.
SSE said its energy supply arm was hit by lower use of energy by customers during a mild winter and a higher cost of gas.
The group pledged earlier this year to freeze household gas and electricity tariffs until January 2016, but said this did not impact on the latest annual figures, for the year to the end of March.
SSE made the promise a day before regulator Ofgem announced plans to refer the energy sector for a full-scale competition probe.
Chief executive Alistair Phillips-Davies said the pledge had been “hugely popular”.
“It remains the only such commitment available to customers and will mean we take a hit on retail profits over the next couple of years,” he added.
SSE revealed that its number of customer accounts in Britain and Ireland had fallen by around 370,000 to 9.1 million, but said this decline came before its price freeze came into effect.
It added: “Energy supply profit margins are unlikely to recover to their 2013 level for at least another two years as costs rise but SSE’s prices do not.”
SSE hiked tariffs by an inflation-busting 8.2 per cent in November, and like other companies blamed the rise on higher costs of buying and distributing wholesale energy as well as Government levies on bills to pay for energy efficiency policies.
After the coalition announced it was rolling back the levies, it said it would cut average dual fuel prices by 3.5 per cent from March 24. The price freeze was announced two days later. It said the pledge will mean profits from its retail arm – which includes boiler and central heating services – will be around £100m lower than they would have been.