SSE plc
RESULTS OF UK's EU REFERENDUM
The referendum held yesterday has resulted in a vote for the UK to leave the European Union. As SSE stated in its Notification of Close Period statement in March 2016, the result of the EU referendum presents no immediate risk to how SSE serves its customers or to the investment that it continues to make in order to fulfil its core purpose. The level of risk may, however, increase if the vote to leave leads to a prolonged period of uncertainty about the legislative or regulatory framework that SSE operates within.
It is not yet clear how this matter will now progress, but SSE believes that the UK Government should be mindful of the importance that the harmonisation of the GB energy market with the countries in Europe can have on efforts to deliver clean, secure and affordable energy. The UK Government acknowledged, in a document published by the Secretary of State for Foreign and Commonwealth Affairs in February 2016, that, in the event of a vote to leave, an agreement on the continued involvement of the UK in the Internal Energy Market (IEM) would need to be resolved in the context of managing the transition, fixing the terms of exit and fixing a future arrangement. SSE agrees with the UK Government that collaboration with other European countries on energy matters is important for UK consumers. It therefore hopes that the UK Government and the European institutions will provide clarity on future plans for the UK's involvement in the IEM.
As its Annual Report 2016 makes clear, SSE recognises politics, regulation and compliance as one of its principal risks and prolonged uncertainty following the EU referendum would add to that risk. Nonetheless, by maintaining a balanced range of economically regulated and market-based energy businesses SSE is strongly positioned to manage changes to the operating environment in which it operates. SSE's resilient business model ensures that the impact of any uncertainty should be minimised as the UK responds to the result of the European Union referendum. It will continue to focus on effective management of political and regulatory risk and on safeguarding the interests of customers.
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