Your independent energy adviser
0800 051 5770

Moody’s Downgrades Energy Companies

Moody Moves in the UK Energy Market

Moody’s the credit ratings agency pronounced a sombre mood around the UK energy markets as they downgraded SSE’s credit outlook and sounded a note of caution over Centrica, owners of British Gas Business.

Moody’s cited “challenging market conditions” as both of the remaining British owned Big 6 energy companies faced downgrades.

Moody’s justified the SSE outlook downgrade because of

“an increasingly difficult and uncertain operating environment for utility companies in the UK, which is likely to maintain pressure on SSE’s ability to grow profits, particularly in its retail supply business”

Moody’s also cited that the CMA investigation into the energy market was adding additional pressure on the companies and that the

“Government plans to reform the wholesale energy sector, encourage new investments and create more certainty for existing plants are still relatively untested and may take some time to benefit the companies”

Indeed Moody’s highlighted that the ultimate consequence of the CMA investigation might be the break up of the current vertically integrated energy company model and that such a separation of the generation and retail arms of the Big 6 would have a disproportionately larger impact on British Gas.

Moody’s explained:

“As the company with the largest market share in the retail energy supply sector (in gas in particular) and the strongest dual fuel margins across electricity and gas supply compared to peers, Centrica may be particularly exposed even though it has already taken steps to cut bills”

To add to the uncertainty they also cited the Scottish referendum as providing further risk to the SSE business, saying:

“In the event that Scotland chooses to become an independent State, it could mean that the fully-integrated GB energy system may not continue in its current form”

As the last two British owned Big 6 energy suppliers, facing a raft of new challenges as well as an on-going CMA investigation Moody’s comments are as unsurprising as they are unwelcome.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.