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SSE and Npower in energy merger talks

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Energy supplier SSE says it has been in talks with the owner of rival Npower with a view to forming a new UK energy business. It said had been in discussions with Germany’s Innogy about merging their UK gas and electricity supply businesses into an independent UK company.A merger would bring together two of the UK’s “big six” gas and electricity suppliers.SSE, the UK’s second-largest supplier, said the talks were “well-advanced”.SSE, formerly known as Scottish and Southern Energy, supplies energy to 7.77 million households while Npower serves 4.8 million.The other four major suppliers in the UK are British Gas, Scottish Power – which is owned by Spain’s Iberdrola, Germany’s E.On and France’s EDF.Price cap pressureThe merger talks take place against an intensifying debate about how well the big six companies are serving UK customers.Despite years of competition, many households do not switch supplier freely, leaving a large chunk on the most expensive Standard Variable Tariffs (SVTs).About 12 million households are on some form of default tariff, which can cost hundreds of pounds a year more than the cheapest deals.Last month, the government published draft legislation that would give energy regulator Ofgem the power to cap SVTs.Business Secretary Greg Clark has said Ofgem should use its powers to impose a wider cap on energy bills more quickly.But the watchdog has warned it could be sued by gas and electricity firms if it capped SVTs without the backing of new legislation.Any merger deal between SSE and Innogy’s Npower would need approval from competition authorities and shareholders.In a statement, SSE said: “In discussions, SSE is mindful of the requirements of customers and the concerns of employees. It will disclose the outcome of the discussions as soon as they are concluded.”Innogy confirmed the two were in “advanced exclusive discussions”.SSE shares rose more than 2% on news of the talks.
Source: BBC News

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