MSE News

Npower-SSE merger given the green light

A merger between Npower and SSE has been given a provisional green light, meaning the big six energy firms could be reduced to five.

Npower and SSE announced in November that their British household energy supply and services businesses would join forces, and now an investigation by the Competition and Markets Authority (CMA) has provisionally cleared the merger.

The investigation found that there is "plenty of choice in the energy market" and a merger will not impact how SSE and Npower set their standard variable tariff (SVT) prices.

An SVT's cost is, as the name suggests, variable, so the rate you pay can go up or down depending on wholesale energy costs. They're usually poor value compared with a fixed tariff – where the price is fixed. If you're on an SVT, you can likely save £100s a year by switching.

The CMA's investigation also found that if SVT customers do switch tariff, they usually change to a cheaper, non-SVT tariff rather than another SVT.

See if you can save £100s/yr by ditching standard tariffs using our free Cheap Energy Club.

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What did the CMA find?

The CMA found that the number of people switching energy provider is the highest in a decade and the proportion on SVTs has fallen.

But it said that people who do not switch are usually on one of the large energy suppliers' SVTs and pay higher prices. Therefore it carefully examined whether the merger would change how the large energy suppliers set these prices.

It found:

  • The risk of losing customers as a result of an SVT price rise will not change with the merger.
  • Evidence that few customers switch between SSE and Npower, instead preferring to move to other suppliers.
  • SSE and Npower do not compete closely on SVT prices.
  • SVT prices are mainly driven by changing wholesale costs.

What does the CMA say?

CMA inquiry group chair Anne Lambert said: "With more than 70 energy companies out there, we have found that there is plenty of choice when people shop around.

"But many people don't shop around for their energy. So, we carefully scrutinised this deal, in particular how it would impact people who pay the more expensive standard variable prices.

"Our analysis shows that the merger will not impact how SSE and Npower set their SVT prices because they are not close rivals for these customers."

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