Plans to merge the retail arms of SSE and npower have raised questions among industry experts.

The £11 billion company, in which SSE shareholders would own around two-thirds of the shares, would have 11.5 million customers and would be listed on the London stock market.

If the deal receives backing from shareholders then it would be completed in late 2018 or early 2019.

Alistair Phillips-Davies, Chief Executive of SSE, said:

“The scale of change in the energy market means we believe a separation of our household energy and services business and the proposed merger with npower will enable both entities to focus more acutely on pursuing their own dedicated strategies, and will ultimately better serve customers, employees and other stakeholders.”

Peter Atherton, an associate at consultancy Cornwall Insight, said: “Given the interference in the market with the price cap, and pressure on margins, the natural reaction is for companies is to try to gain scale.”

Questions for regulators

Alex Neill, Which? Managing Director of Home Products and Services, said: “Mergers of such big players in essential markets, such as energy, are rarely a good thing for consumers, especially given the low levels of competition.

“As both businesses struggle on customer service, coming in the bottom half of our satisfaction survey, the competition authorities must take a hard look before allowing any venture to go ahead.”

Claire Osborne at price comparison website uSwitch added: “The regulatory authorities will need to be satisfied that this deal works in best interest of consumers.”

> See SSE's statement