Energy firm 'may increase prices'

Several energy suppliers cut their prices earlier this year

A leading energy supplier has warned it may have to increase prices next year despite announcing a sharp rise in profits.

Profits at Scottish & Southern Energy (SSE) increased by 36% to from £302.6m to £410.5m over the past year.

The firm said avoiding price increases was an "important goal" given the upward pressures on energy prices.

Energy price comparison website uSwitch.com, claimed the profits gave "plenty of scope" for price cuts.

But SSE said it would not be able to cut customer bills further on top of the reductions announced in March.

SSE, which is the UK's second largest energy supplier, owns Southern Electric, Swalec and Scottish Hydro Electric and has nine million electricity and gas accounts.

Given the upward pressures on energy prices, avoiding an increase between now and the end of 2010 remains an important goal Scottish & Southern Energy

Its results were flattered by comparisons with a year earlier, when delayed price rises hit margins, the company said.

The supplier said its performance over the past six months was consistent with its overall goal of a "moderate, single-digit increase" in profits for the full year.

But its main gas supply business traded at a loss in the half year, while higher forward annual wholesale prices and rising distribution and environmental costs were adding to pressure on the business.

A spokesman for the company said: "While SSE would like to follow the reduction in energy prices it implemented in March with a further reduction if it were possible, it is not able to commit to do so.

"It remains committed, however, to ensuring its prices and, more importantly, bills, are as low as possible over the medium term.

"Given the upward pressures on energy prices, avoiding an increase between now and the end of 2010 remains an important goal."

'Beneficial impact'

Ann Robinson, director of consumer policy at price comparison website uSwitch.com said SSE could afford further price cuts.

She added: "Energy companies have enjoyed a long period of low wholesale prices - these results give a clear indication of the beneficial impact it is having on their bottom lines.

"A 36% increase in half year profits suggests plenty of scope for a further price cut. We urge suppliers to act now so that consumers can enjoy the benefit this winter.

"Last year suppliers increased prices by an eye watering 42% or £381. This year they have cut their prices by 4% or £54. Online customers have fared far better with cuts of 13% or £149. But this is not enough - only 5% or 1.3 million households will be benefitting."