Energy pricing puts SSE at risk of a downgrade
ENERGY firm SSE’s plans to hike prices could put it at risk of a debt rating downgrade, analysts have warned.
The supplier angered consumer groups last week when it said it would raise its bills by 8.2 per cent from next month, adding £104 on to the average annual bill.
SSE blamed the majority of the increase on green initiatives, but the government in turn blamed the wholesale market for raising costs.
“The increased politicisation of UK energy policy could lead the credit rating agencies to take a less positive view on SSE’s credit rating, especially as its credit metrics are already stretched,” said a research note by JP Morgan.
The broker’s analysis added that the company’s rating is “already borderline”, meaning that there is a “real chance” it could get downgraded.
Both Moody’s and Standard & Poor’s have commented on the increased business risk for UK utility stocks after Labour leader Ed Miliband pledged to freeze gas and electricity bills until 2017 if elected, igniting a furious political debate into energy policy.
The proposal has been criticised by business groups, who argue that it would hinder much-needed investment in UK energy networks.
Other big six energy suppliers have not said if they plan to raise bills but are widely expected to announce similar price rises. SSE declined to comment on JP Morgan’s research.