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SSE training centre in Perth, Scotland
SSE is one of the UK’s big six energy suppliers but is now down to 7.7m customer accounts. Photograph: Andrew Milligan/PA
SSE is one of the UK’s big six energy suppliers but is now down to 7.7m customer accounts. Photograph: Andrew Milligan/PA

SSE loses 230,000 customers in 'highly competitive' UK market

This article is more than 6 years old

UK’s second biggest energy supplier had huge exodus of customers in three months after it raised prices by 6.9% in April

SSE lost nearly a quarter of a million customers in the three months to June as it warned that it faced “complex challenges” this year. The UK’s second biggest energy supplier has been shedding customers at a faster rate than before, with the exodus of 230,000, and 210,000 households switching to rival suppliers in the last financial year.

The “big six” firm, which is now down to 7.7m customer accounts, put up its energy prices by 6.9% or £73 in April. It blamed the losses on a “highly competitive” retail energy market.

There are now a record 58 firms in this UK market and the so-called challenger firms are gradually taking a larger share of the pie.

In April, during the flurry of price increases by five of the big six suppliers, 41% of the switches were from larger firms to smaller ones. However, recent figures show that that share fell back in June, to 35%.

Of the big six, SSE has the highest percentage of customers – 91% – on standard variable tariffs, the default rates that bill-payers move on to when cheaper, fixed, deals come to an end.

Such tariffs were criticised as a “rip-off” by Theresa May and ministers during the general election campaign, and both the Conservatives and Labour threatened to impose a price cap on them.

But the plans have since been hugely watered down and it looks likely that 14 million fewer people will have their energy bills capped than May promised.

The energy regulator, Ofgem, held a summit on Monday with consumer groups to discuss what form a “safeguard tariff” would take. Groups that attended said the talks were encouraging but that future discussions should also cover setting targets for suppliers to shift customers off standard variable tariffs.

Alistair Phillips-Davies, chief executive of SSE, has argued that a cap would not help consumers. On Thursday the firm reiterated that view, saying: “Competition should be at the heart of the retail energy market.”

It was revealed last month that Phillips-Davies had been awarded a 72% pay rise, taking his remuneration to £2.92m. His pay was approved by 98.19% of votes cast at the company’s AGM on Thursday.

In a trading update on Thursday, the group said milder temperatures between April and June had curbed household energy use. Electricity consumption was down by 3.4% on the same period in 2016, and gas consumption fell 15.4%. However, higher wind speeds meant power generation from its windfarms was up by more than a fifth.

Phillips-Davies said: “As expected, 2017-18 is presenting a number of complex challenges to manage, but SSE is a focused, resilient and adaptable business with efficient operations and disciplined investment at its core.”

The group said it was maintaining its target of increasing the year’s dividend by at least RPI inflation, which was welcomed by analysts. SSE’s share price initially fell, but later rallied to close up 0.41% at 1,477p.

Households are also fleeing other large suppliers. Rival ScottishPower said on Thursday that it had 100,000 fewer customer accounts at the end of the first half of this year than in the same period in 2016, leaving it with 5.3m accounts.

ScottishPower, owned by the Spanish energy firm Iberdrola, said it faced “fierce competition in the UK and we expect this to continue for the foreseeable future”.

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