SSE, Innogy May Spin off Retail Energy Arms as May Turns Up Heat

(Bloomberg) -- SSE Plc and Innogy AG plan to combine their U.K. retail energy units into a new company as Britain’s gas and power providers come under increasing pressure to cap consumer prices in what could be the biggest shakeup of the market in more than a decade.

The combination of two of the U.K.’s largest utilities may cut the number of leading suppliers from the so-called Big Six to five. Discussions between SSE and Innogy are advanced but no final decisions have been taken, the companies said on Tuesday.

The announcement may be a response to U.K. Prime Minister Theresa May’s plans to limit domestic prices to protect millions of households from what it calls “rip-off” charges. U.K. Business Secretary Greg Clark told lawmakers on Tuesday that the government will seek to push through the cap as soon as possible.

The new company will combine SSE’s B2c and Energy+ businesses and Innogy’s Npower. The new business will be listed, according to the utilties’ statements.

SSE has fallen 8.5 percent this year, compared with a 12 percent gain in Euro Stoxx 600 utilities index. Innogy, itself spun off from German power producer RWE AG last year, has gained 26 percent in the same period.

SSE rose as much as 3.8 percent, the most since June 2016, to 1,426 pence, and traded at 1,411 pence at 3:09 p.m. in London. Innogy rose 1.5 percent in Frankfurt.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net.

To contact the editors responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net, Andrew Reierson

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