A planned merger between the SSE and Npower Retail Frames has been questioned after companies announced late on Thursday that their planned merger would be delayed, as it blamed for the UK government to introduce a new price tag on energy bills.
Any changes to the merger "commercial terms" and subsequent listing of the new company require additional discussions in the next few weeks, so that the terms of the agreement can be reviewed, the companies said in two statements.
"It is likely that the implementation of the proposed combination will be delayed after the first quarter of 2019, but all work aimed at achieving the formation and listing of the new company will continue," said SSE in a statement.
The company considered the potential impact of the fuel cost price, which was completed this week, on the new company's requirement to place collateral against its credit exposure and its ability to obtain and maintain an appropriate credit rating.
Alistair Phillips-Davies, SSE's CEO, said: "In assessing any changes to the commercial terms of the proposed combination SSE Energy Services / npower, the interest of customers, employees and shareholders will be crucial."
A person familiar with the deal is due to the fact that forecast profit margins for the combined business are expected to fall under pressure from the introduction of the price tag, so the arrangement needed to be reviewed.
However, the question of price cuts has been well-known in the market and the level it has been set for customers with standard variables (SVT) was largely expected by industry.
The merger was finalized by the UK Competition Guard last month.
Carrying the two energy merchants together will reduce Britain's "Big Six" energy suppliers to five and have raised concerns that it could undermine competition in an industry where the government and regulatory authorities had worked to loosen the grip of the established grips – especially in relation to SVT .
The SSE said that it would not give further comment to the deal by mid December.
Further reporting by Arash Massoudi and David Sheppard