and cost to be available to the customer
and exchanged with the supplier.
and Climate Change, and aim to gain an understanding of how consumers react to improved information about their energy consumption. The trials consist of different elements using different methods to provide feedback on energy consumption.
SSE was the only energy supplier in the EDRP to hold trials involving engagement with entire communities. The trials were held in North Leigh in Oxfordshire, Alyth in Perthshire and St Athan in South Wales. The communities of North Leigh and Alyth achieved their community-wide 10% energy reduction and received an award of £20,000 each from SSE. The trial in St Athan started later, and is therefore not due to be completed until later this year, but good progress is being made. A variety of measures was available to each community including smart meters, real- time display devices (which show energy use in monetary value), energy efficiency advice and insulation offers. As well as the support provided by SSE, the communities arranged various events locally, designed to involve the whole community.
The information that has been obtained during the trials has been and will be extremely useful and it will be used to help shape the future of the energy industry. The primary purpose of the trials was to understand how people use energy and how savings can be made when more control is given to individuals and communities.
Metering priorities in 2010/11 and beyond
For Metering, the key priorities are: k maximising the number of bills issued
to customers on the basis of an actual – as opposed to estimated – meter reading; and
k applying the lessons learned from the EDRP to inform a full roll-out of smart meters throughout the country. SSE believes that there must be radical changes in the way that energy is produced and consumed and these energy reduction trials, which have used a number of innovative technologies, will assist customers in reducing their energy consumption. It strongly supports smart meters, and the opportunity they provide to help customers cut their energy consumption, while reducing the number of service-based tasks which are largely administrative and reactive in nature, and replacing them with more substantive energy advice, products and services. They have the potential to help transform the relationship between customers and their energy supplier.
•
Lord Smith of Kelvin Chairman
I am pleased to introduce the Corporate Governance Report for 2009/10. It explains our approach to corporate governance in detail by describing: the SSE team; risk management and internal control; how the Board works; and setting out the work of each of the five Board Committees – Audit, Risk and Trading, Nomination, Safety, Health and Environment and Remuneration. The Board does not regard corporate governance as a burden but as the best way of ensuring that SSE is a consistently successful, well-run and responsible business, capable of delivering increases in the dividend payable to shareholders in the short, medium and long term.
Evaluation
A strong corporate governance framework is particularly important. In the current economic business environment it is vital that the risks to which SSE is exposed are properly identified and managed. That is one of the reasons why the Board decided this year that the evaluation of its performance should be carried out by an external party for the first time. This evaluation paid particular attention to risk management, and is reported on in more detail in the following report.
The independent evaluation was a worthwhile exercise and it is interesting to note that the proposals for the new Combined Code on Corporate Governance now provide that external Board evaluation should take place at least every three years. We contributed to the consultation on the review of the Combined Code and welcome the changes which have been proposed.
Values
SSE pays particular attention to the highest level of governance and strives to foster a culture that values proper ethical standards, personal and corporate integrity and respect for others. We have recently produced a code of business practice, ‘Doing the right thing’, which brings all our main policies on responsible practice together in one place. This has been distributed to everyone in SSE, and is also a key part of the induction programme for everyone joining the Company as a new employee. There is a lot more information about SSE’s key policies on issues relating to responsible business practice on the SSE website.
More broadly, the SSE SET of core values – Safety, Service, Efficiency, Sustainability, Excellence and Teamwork – remain SSE’s guiding principles. As set out in the Remuneration Report, employees’
performance against them is appraised annually and the most important of them all – Safety – is the first item on the agenda for every Board meeting.
Commitment
The commitment of the Directors to the business of SSE remains undiminished. The non-Executive Directors devote a significant amount of time to SSE over and above attendance at Board and Committee meetings. During the year each non-Executive Director visited key business locations throughout SSE and had briefings from members of the SSE team on a range of matters such as credit management, energy trading and major projects. Board meetings took place on a number of SSE sites, including the regional office in Reading and the customer service centre at Cumbernauld. I know that all of the non-Executive Directors value their association with SSE and with the excellent team of people employed by the Company. The entire Board is committed to supporting SSE during the next phase of its development. Throughout that time, we will work together to make sure that SSE continues to be a responsible, well- run company with strong corporate governance.
Lord Smith of Kelvin Chairman
01 02 03
04 05
06 The Board of Directors 01 Lord Smith of Kelvin 02 Alistair Phillips-Davies 03 Thomas Andersen 04 Ian Marchant 05 René Médori 06 Colin Hood 07 Gregor Alexander 08 Richard Gillingwater CBE 09 Lady Rice CBE
10 Nick Baldwin
07
Lord Smith of Kelvin
Chairman
Robert joined the Board as a non- Executive Director in June 2003 and became Chairman in January 2005. He is also: Chairman of the Weir Group plc; a non-Executive Director of Standard Bank Group Ltd; Chairman of Glasgow 2014 Ltd, the organising committee for the Commonwealth Games; Chancellor of the University of the West of Scotland; and a member of the Council of Economic Advisers to the First Minister of Scotland. Robert is Chairman of the Nomination Committee and a member of the Remuneration Committee.
Ian Marchant
Chief Executive
Ian was appointed Chief Executive in 2002, having been Finance Director since 1998. He has worked in the energy industry since 1992, when he joined Southern Electric. He is also: a member of the UK Business Council for Sustainable Energy; Chairman of the Scottish Climate Change Business Delivery Group; Chairman of the 2020 Delivery Group; a member of Ofgem’s Environmental Advisory Group; a member of the Energy Research Partnership; a non-Executive Director of John Wood plc and Maggie’s Cancer Centres; and became Chairman of the Engineering Construction Forum in 2009. Ian is a member of the Nomination Committee, Risk and Trading Committee and is Lead Director for the Environment and Corporate Responsibility.
Colin Hood
Chief Operating Officer
Colin was appointed Chief Operating Officer in 2002, having joined the Board as Power Systems Director in 2001. He has worked in the energy industry since 1977, when he joined Scottish Hydro Electric. He has Board level responsibility for Generation, Power Systems, Human Resources and IT. Colin is a Director of Scotia Gas Networks and became a non-Executive Director of FirstGroup plc in May 2009. He is SSE’s Lead Director for Health and Safety matters and is Chairman of the Safety, Health and Environment Advisory Committee.
Lady Rice CBE
Senior Independent Director
Susan joined the Board as non-Executive Director in July 2003 and became Senior Independent Director in 2007. She is Managing Director of the Lloyds Banking Group Scotland. Susan is also a non- Executive Director of the Court of the Bank of England and chairs the Board of the Edinburgh International Book Festival, along with several other organisations. Susan chairs the Remuneration Committee and is a member of the Nomination Committee.
Richard Gillingwater CBE
Non-Executive Director
Richard joined the Board as a non- Executive Director in May 2007. He is Dean of Cass Business School and is non-Executive Chairman of CDC Group plc and a Senior Independent Director of Tomkins plc. Richard is a member of the Audit, Remuneration and Nomination Committees.
Alistair Phillips-Davies
Energy Supply Director
Alistair was appointed Energy Supply Director and joined the Board in 2002, having previously been Energy Trading Director. He has worked in the energy industry since 1997, when he joined Southern Electric. Alistair has Board level responsibility for Energy Trading, Electricity and Gas Supply, Energy Efficiency, Customer Service, Sales, Marketing and Energy Services. He is Chairman of the Energy Retail Association and chairs the Risk and Trading Committee.
Nick Baldwin
Non-Executive Director
Nick joined the Board as a non-Executive Director in 2006. Previously, he worked in the energy industry, culminating in being Chief Executive of Powergen plc. Nick is a non-Executive Director of the Nuclear Decommissioning Authority, the Forensic Science Service and Sanctuary Housing Group and is Chair of the Public Weather Service Customer Group. He is also Chairman of TreeHouse Trust. Nick is a member of the Audit, Remuneration and Nomination Committees.
René Médori
Audit Committee Chairman
René joined the Board as a non-Executive Director in June 2003. He is Finance Director of Anglo American plc and is a non-Executive Director of Anglo Platinum and DB (De Beers) Investments. He is Chairman of the Audit Committee and a member of the Nomination Committee.
Gregor Alexander
Finance Director
Gregor was appointed Finance Director and joined the Board in 2002, having previously been Group Treasurer and Tax Manager. He has worked in the energy industry since 1990, when he joined Scottish Hydro Electric. Gregor is a Director of Scotia Gas Networks. He is a member of the Risk and Trading Committee.
Thomas Thune Andersen
Non-Executive Director
Thomas joined the Board as a non- Executive Director in 2008. He is a non- Executive Director of Petrofac Plc and of VKR Holding. He was Chief Executive of Maersk Oil, a member of the Group Executive Board AP Moller-Maersk, as well as director or chairman of a number of companies within the AP Moller-Maersk Group, until 2009. He is a member of the Audit, Nomination, and Safety, Health and Environment Advisory Committees.
On 31 March 2010, SSE employed 20,177 people, an increase of 1,382 on the previous year. Fundamental to the Company’s success is the professionalism and enthusiasm of employees, guided by SSE’s Teamwork value, which states: ‘We support and value our colleagues and enjoy working together in an open and honest way.’