The renegotiation is taking place due to the introduction of an energy price cap of £1,137 a year, expected to come into force in 2019 – the new cap will result in suppliers cutting the price of their default tariffs to the level of the cap or below it.

However, once the contract is finalized, the merger will create UK’s second largest energy company, and has already acquired regulatory approvals. Both firms said they still thought the merger had benefits, but that any final deal was likely to be delayed.

BBC News reported that in September, SSE said the cap would lead to “significantly lower” profits than it had expected at the start of the financial year in its retail arm. As a result, SSE and Npower’s German owner Innogy were in talks “regarding potential changes” to the commercial terms of the deal, it added.

SSE chief executive Alistair Phillips-Davies said: “We continue to believe that creating a new, independent energy supplier has the potential to deliver real benefits for customers and the market as a whole, and that remains our objective.”

There is expected to be an update on the progress by mid-December.

Through this merger, the companies were aiming to bring down the number of leading energy firms in the country from six to five by Q1 2019 but this may not happen in the expected time frame.

Innogy said in a statement that “adverse developments in the UK retail market and regulatory interventions such as the price cap have had a significant impact on the outlook for the combined retail company”. It said the negotiations would include talks about “potential additional direct or indirect financial contributions by each party.”

Earlier this week, energy regulator, Ofgem said the cap would save 11 million customers an average of £76 a year on their gas and electricity bills.