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“Big six” energy giant SSE has seen a sharp drop in customer numbers and has cut its full-year earnings forecast. It said it had lost 160,000 customers in the final three months of last year, leaving it with 5.88 million accounts.

SSE also cut its profit forecast for this year after a European court ruled out a UK industry-wide subsidy which had supported emergency fuel supplies.

Last November, SSE suffered a blow when it called off its plan to merge its household supply arm with Npower’s.

The firm -blamed “challenging market conditions” and the price cap on bills.

That deal would have created the UK’s second-biggest energy supplier, shrinking the “big six” to the “big five”.

SSE said it was assessing options for its domestic supply business. SSE said that the European court judgement would cut income by about £60m this year.

The company said it expects this to be “a matter of timing only” as the government is expected to make the payments in the future.

But while it waited for that, the company said that earnings per share – the amount of profit divided by the number of shares in issue – would be 6p lower than previously expected, and in a range of 64-69p, compared with its November forecast of 70-75p.

SSE chief executive Alistair Phillips-Davies said the company was making “good progress” on deciding what to do with its retail business, SSE Energy Services.

The options it has identified so far include: simply splitting it off and listing it on the stock market; a sale; or an alternative transaction.

The shares were down slightly on the news. Donald Brown, from stockbrokers Brewin Dolphin, said the future of SSE Energy Services “remains unclear”.

“However, it’s difficult to see who might be interested in buying the business, which has been in decline for some time,” he added.