Scottish & Southern Energy has transferred extra staff into its debt collection operation to cope with rising numbers of cash-strapped customers struggling to pay bills. The owner of Scottish Hydro Electric saw profits more than halve over the first half of its financial year to £302.6m on an adjusted basis after a sudden spike in gas prices last year was only passed on to customers from August although it maintains it anticipates a small increase in full-year profits. SSE hiked average gas bills by 29.2% and electricity costs by 19.2% in the summer.

Chief executive Ian Marchant told The Herald yesterday that he expected to cut bills some time early next year but is “unlikely” to return them to pre-August levels and said the company had already seen signs that some customers are struggling. “We have seen more interest in fixed-price tariffs than in the past from people wanting certainty. We have seen more inward requests for energy efficiency advice and work than we have ever done. “On bad debts we looked at the issue earlier this year and as the house market declined some of our staff that were deployed on dealing with house moves were redeployed into debt collection and so by the time of the price increase we were ahead of where we were the year before in debt collection.” SSE, which also owns Scotia Gas Networks, Southern Electric in England and Welsh SWALEC, reported a fall in bills that were more than six months overdue from £78.5m a year ago to £73.4m but warned of “significant debt management issues” in future. Marchant said: “We have seen a growth in people ignoring red reminders and going to warrant stage. “We are predicting we will see larger write-offs. But we do not think it will get out of hand, If we can reduce prices in the earlier part of next year, when we discuss how you can pay a bill we can spread some of it into the lower price period before. We can spread it over 18 months or two years.” Scottish Hydro Electric provided less power to customers over the six months to September 30 than the year before as the north of Scotland saw drier weather than normal, which cut levels in its reservoirs to just a third of their maximum.

But the company saw a net gain of 450,00 electricity and gas customers over the six months, many in central Scotland. Marchant said: “We are growing in both electricity and gas throughout the UK. We have had a particular focus on the central belt in the last 18 months and we have seen big proportional growth as we raised the profile of the Scottish Hydro Electric brand.” The company, which has net debt of almost £4.7bn has refinanced £500m of the £1.3bn it borrowed from banks including Barclays and Royal Bank of Scotland to buy Irish renewable energy company Airtricity earlier this year. The banks have agreed to extend by a year to June 2010 another £500m of the facility. Marchant said he is “reason- ably confident” the company can refinance the remainder. He indicated that the company would look at further acquisitions as “financially-led investors” exit projects. But he said he would consider options including issuing shares to finance future deals. “Bank financing for long-term business is effectively dead for a generation.”

The company reiterated its prediction of a modest rise on last year’s underlying full-year profits of £1.23bn and increased its interim dividend from 18.1p to 19.8p. It said the full-year dividend is likely to increase from 60.5p last year to at least 66p. Its shares rose 55p, or 4.7%, to 1199p.