November 13, 2019 / 7:50 AM / a month ago

SSE warns on Labour's energy nationalisation policy

LONDON (Reuters) - British utility SSE (SSE.L) on Wednesday warned of challenges for energy firms due to the election next month and opposition Labour Party plans to nationalise some energy infrastructure, as it reported a higher first-half adjusted pretax profit.

FILE PHOTO: An SSE company logo is seen on signage outside the Pitlochry Dam hydro electric power station in Pitlochry, Scotland, Britain, November 8, 2017. REUTERS/Russell Cheyne

Labour has pledged to nationalise energy networks and also set up a state-owned company to develop and own stakes in the country’s offshore wind farms if it wins power in the Dec. 12 election, plans that SSE says could make it more difficult to develop new projects.

Labour’s plans would be hugely disruptive for the industry and could risk the UK’s leadership position in offshore wind, Alistair Phillips-Davies, SSE CEO said in a telephone call with journalists.

Britain is the world’s largest offshore wind market accounting for 40% of global capacity and plans to generate a third of its electricity from the technology by 2030 in a bid to achieve net zero carbon emissions by 2050.

“The best people to achieve net zero are the private companies that are currently performing and delivering well,” Phillips-Davies said.

The company, which plans to shut its last coal-fired power plant by the end of March 2020, also called on the government to increase offshore wind targets and back new onshore development.

SSE reported an adjusted pretax profit of 263.4 million pounds for the six months ended Sept. 30, up from 229.4 million pounds a year earlier.

The profit did not include figures from its British retail arm, which SSE in September agreed to sell to OVO Energy for 500 million pounds.

SSE booked a 489.1 million exceptional charge against the household energy supply business which is reflective of the transaction price agreed with OVO, it said.

The deal, which is being scrutinised by Britain’s Competition and Markets Authority (CMA), is on track for completion in early 2020 subject to gaining regulatory approval, SSE said.

SSE’s half-year profit was buoyed by the inclusion of around 110 million pounds of payments from Britain’s capacity market, which pays power producers to be available during times of high demand.

The European Commission last month approved reinstatement of the scheme, which had been on hold since last November after a European court ordered the Commission to secure more details on certain elements of the scheme, such as information on energy consumers willing to reduce their consumption when needed.

Reporting by Susanna Twidale in London, additional reporting by Muvija M in Bengaluru; Editing by Susan Fenton and David Evans

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