Centrica and SSE feel chill on Conservative price-cap pledge
The City bailed out of British Gas owner Centrica and SSE on Tuesday as the Conservatives confirmed plans for a price cap on energy bills.
Centrica’s shares dropped 5.8p, or 3%, to 196.6p and SSE eased 12p, or 1%, to 1437p as Theresa May lashed out at “rip-off energy prices” and vowed to protect “ordinary working families”.
But the proposed price cap on standard variable tariffs — which would be set by Ofgem — has been attacked for potentially killing competition as well as discouraging investment in the sector.
Centrica, which has 14 million gas and electricity customers, said in a trading update this week that it has put forward alternatives to the cap, and chief executive Iain Conn has insisted that the company has a “cash buffer” to play with to help protect dividend payments. Some analysts suggest the cap would cost Centrica more than £300 million in lost profits.
German energy giant Eon — one of the UK’s Big Six — today said sales in the UK fell 18% to €2.2 billion (£1.9 billion) in the first quarter — a fall attributed to the weaker pound, fewer customers and lower demand. Profits fell 43% to €160 million, which the company put down to the drop in sales as well as higher payments for renewables obligations.
