SSE Pledges to Curb Price Rises If U.K. Cuts Green Levies

SSE Plc (SSE), the U.K.’s second-biggest energy supplier, pledged to curb increases in customer bills if the government cuts environmental levies that push up tariffs.

The utility would “absolutely” rein in the increases if Britain decided to fund environmental subsidies through taxes rather than customer bills, Chief Executive Officer Alistair Phillips-Davies said today.

SSE, along with larger competitor Centrica Plc (CNA) and RWE Npower Plc, were criticized last month for raising prices about three to four times inflation, which they blamed in part on levies for government-run green programs. Prime Minister David Cameron ordered a review of the environmental charges, which added an average 112 pounds ($179) to bills this year.

“Absolutely we would look to implement and pass on any cost reductions that we receive from government sensibly taking these policies into general taxation,” Phillips-Davies said on a conference call after SSE reported a decline in earnings. It announced an average 8.2 percent jump in energy bills Oct. 10.

Phillips-Davies said a move to curb the increase may bring SSE’s price revision in line with that of EDF Energy Plc, which yesterday said it would raise bills by only 3.9 percent in anticipation of a cut in social and environmental levies.

RWE Npower would also scale back increases if the subsidy burden is reduced, the British Broadcasting Corp. reported yesterday, citing Director of External Communications Guy Esnouf. Npower, which confirmed the comments today by phone, announced a 9.3 percent increase in power prices and an 11.1 percent jump in gas on Oct. 21.

Carbon Floor

U.K. energy bills also include a charge to help utilities cover carbon costs. The government set a floor on carbon prices in April to spur investment in clean-energy projects by making it more costly to burn fossil fuels. The minimum price of 4.94 pounds per ton of emissions will climb to 18.08 pounds for the year through March 2016, the Treasury said in March.

That levy doesn’t look sustainable when compared with the lower price for carbon in Europe, and may harm industry, Phillips-Davies said today.

“We believe firmly that either it disappears or that it should be enshrined in primary legislation so people can generally bank on the fact it could be there for a long period of time,” he said. “We’ve made that clear to government.”

Labour opposition lawmaker Tom Greatrex wrote to Energy Secretary Ed Davey on Oct. 31 asking whether the tax would be part of Cameron’s review of environmental charges. The Treasury couldn’t immediately comment when contacted today.

SSE’s adjusted pretax profit totaled 354 million pounds in the fiscal first half, a 12 percent decline from a year earlier after its retail unit reported a loss because of higher costs, the Perth, Scotland-based company said today.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editors responsible for this story: Amanda Jordan at ajordan11@bloomberg.net; Reed Landberg at landberg@bloomberg.net

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