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SSE in race against time to set up ?3bn spin-off before energy price cap

Britains second largest energy supplier is in a race against time to set up its ?3bn household energy spin-off before ministers bring in an energy price cap by early 2019.
SSE is hoping to team up with Npowers German parent company Innogy to cut ties with the household market by setting up a standalone company before the Government drops an axe on energy company profits in a little over a year.
The pair submitted their plans for a new ?3bn energy giant to the CMA within hours of revealing them to investors yesterday afternoon.
Peter Terium, Innogys boss, told the Telegraph that the Governments controversial price cap plans speeded up talks with SSE, which began last year in a bid to ward off competition from a rising number of upstart challenger brands.
We want this to conclude as soon as possible, he said.
But the mega-merger of two of the big six energy companies is likely to face a year-long probe by the Competition and Markets Authority, testing the pairs plan to list the new company on the London Stock Exchange in a little over 12 months.
The new energy giant will include eightmillion household accounts supplied by SSE as well as the household and business customers ofNpower, creatinga supplier with around 11.5 million customer accounts across the country.
It will be Britains largest electricity supplier, and second only to British Gas as the countrys largest household gas supplier.
Mr Terium said both companies were confident that it would not hold an unfairly large sliceof the market.
SSE in race against time to set up ?3bn spin-off before energy price cap

The new energy giant hopes to emerge before the Government's cap on energy prices takes full force
If we thought it was not possible, we would surely not have entered into this plan, he said.
But the expectation that the process will take a year suggests that the pair are bracing for a full-scale investigation.
Alex Neill, from consumer group Which?, urged the CMA to have a hard look to avoid customers being left worse off.
Mergers of such big players in essential markets such as energyare rarely a good thing for consumers, especially given the low levels of competition, he said.
Britains energy supply market is under fierce political scrutiny as the Government moves ahead with legislation to cap standard energy tariffs to tackle fears that customers who fail to switch to a cheaper deal are being overcharged by their supplier.
The move is likely to wipe almost ?1bn in profits from the household energy market and has already dragged the share price of British Gas owner Centrica to a 14-year lowon the FTSE 100.
SSE in race against time to set up ?3bn spin-off before energy price cap

Britain's second largest supplier said it made a loss from its household energy business for the first half of the year

Credit:
Andrew Milligan/PA Wire
Professor David Elmes of Warwick Business School described the merger plans as a wake-up call on just how much pressure is being put on the sector.
There comes a point where companies who have the choice of investing in the UK or elsewhere see the UK as a tough market to compete in, he said.
SSEs pre-tax profits fell more than 40pc to ?402.2m for the first half of the year, with lower profits for its networks business and portfolio of power generation assets. SSE said its household retail business made a loss, but its services and business supply divisions helped to boost its profits to ?70m for the first half of the year from ?60m last year.
Alistair Phillips-Davies, SSEs chief executive, said the group was very proud of what we've delivered but that it would make the right decisions for each of its energy business units.
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