The Big Six in the UK has been reduced to five with the merger of SSE and Innogy-owned Npower.

SSE chief executive Alistair Phillips-Davies said the merger would allow both companies to “focus more acutely on pursuing their own dedicated strategies”.
The new firm is expected to be roughly the size of market leader British Gas and to serve about 11.5 million customers.

However, SSE retail’s chief operating officer, Tony Keeling, denied that was the reason for the merger.

“We’ve been looking for well over a year about what we should do,” SSE retail COO told BBC, “We’ve listened to government regulators and customers and understand that the market needs to transform and we’re absolutely committed to doing that. By merging SSE’s retail business with Npower’s retail business to form a new organisation, we think we can be more efficient, more agile and more innovative for customers.”

The deal could fall under the jurisdiction of the Competition and Markets Authority if it progresses beyond its current stage, but Mr Keeling added: “We think it is very good for competition and customers. There are over 60 people competing in the market and if you look back to 2011, there were only eight.”

Innogy’s chief executive officer, Peter Terium, agreed the price cap was not the reason for the merger but did concede it may “have pushed it a bit quicker”.

In a statement, SSE said the new firm was expected “to deliver enhanced value” and that savings in costs and combined IT platforms would “ultimately enable the company to be an efficient competitor in its markets”.

The statement added, “Although no decisions have been made at this stage, significant synergies are also anticipated, largely derived from operational cost efficiencies and capital expenditure savings from a combined IT platform. These savings are expected to ultimately enable the company to be an efficient competitor in its markets, competing more effectively and contributing to lower costs for customers.”

The new company’s strategy ‘includes a clear focus on responding to the needs of vulnerable customers and on making progress with the roll-out of smart meters.’