SSE: game-changer or token gesture?

By KelvinR

So UK utility company SSE has broken ranks with the country’s other ‘Big Six’ providers and overhauled the way it buys and sells its power in a bid to be transparent and rebuild public trust.

Maybe the SSE boardroom has done it for the good of the consumer – what it has certainly done it for is for the good of SSE.

It’s a worthy move, but not as bold as it might first seem. The six utilities – SSE, British Gas, EON, EDF, nPower and ScottishPower – have been under huge pressure from the government, consumer groups and regulator Ofgem to overhaul their pricing policies.

An enforced change was always going to come, so SSE has jumped before it is pushed. Will the other five follow suit? Of course they will, because all six rely on each other for business. Although UK customers do switch companies, they rarely venture out of the Big Six arena to smaller firms, so the six are sharing the same feeding pool. If one does something that’s seen to win more business, the others will follow.

Will it increase competition in the market? I don’t see how. Some smaller independent power providers already buy wholesale, but not on the one-day-ahead market. They need to buy their power often a couple of years in advance, so it’s still hardly a level playing field.

But even if it was, the newer entrants to the sector would find it hard to win a greater market share. A combination of customer ignorance and apathy is what keeps the Big Six whirligig going round. Consumers may be fed up with their tariffs, but they often only think to look to one of the other six for an alternative. They either don’t know many of the smaller firms are out there, because those companies don’t have the marketing spend to raise their profile – many are just breaking even – or they can’t be bothered to take the time to find them.

Maybe government, Ofgem and consumer groups should work together to provide a central information hub on who is out there, what they offer and how much they charge.