SSE profit rise: A case of rather bad timing

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It's not just that their price increases of 9% are just starting to kick in, or just that the weather has just started to get cold. But after two days of allegations about price fixing in the wholesale energy markets, a increase of around 40% in profits at SSE, one of the big 6 companies, is certainly unfortunate timing. This morning consumer groups are already furious.

An SSE training centre in Perth
An SSE training centre in Perth Credit: Press Association

The company's explanation, which you can hear from its Chief Executive here, is that the rise in profit was so big because it represents a bounce back from a poor year in 2011. And the company says that only 8% of that total profit actually comes from its energy supply business, with only 1.5% of each bill going to profit. That margin they claim of just 1.5% in that part of the business is certainly tight.

Energy companies are having to deal with increased costs imposed on them by government, spend a lot on infrastructure, and wholesale costs of the power they buy are under pressure too.

For companies to be able to function properly and invest for the future, which is extremely expensive in this industry, they do have to be making money. But this profit increase won't do much for the already fraught relationship between the energy companies and their customers.

British Gas' owner, Centrica will reveal their half year results tomorrow morning.