SSE has confirmed it is merging its British domestic business with Npower to form a new energy company. SSE, the UK's second-largest energy supplier, which also reported a big fall in its adjusted pre-tax profits of 13.9% in the six months to September, revealed the merger talks on Tuesday. The deal knocks the country's "Big Six" energy firms down to five. "We are very proud of what we've delivered over many years," said chief executive Alistair Phillips-Davies. He said the merger would allow both to "focus more acutely on pursuing their own dedicated strategies". The new firm is expected to be roughly the size of market leader British Gas and to serve about 11.5 million customers.

The news comes less than a month after the government published draft legislation to lower the cost of energy bills. However, SSE retail's chief operating officer, Tony Keeling, denied that was the reason for the merger. "We've been looking for well over a year about what we should do," he told BBC Radio 4's Today programme. "We've listened to government regulators and customers and understand that the market needs to transform and we're absolutely committed to doing that. "By merging SSE's retail business with Npower's retail business to form a new organisation, we think we can be more efficient, more agile and more innovative for customers."

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