* Says will cut price hike by up to 4 pct if govt. cuts green levy
* H1 profit down 12 pct to 354 mln stg
* Retail business swings to operating loss of 89.4 mln stg
* Interim dividend raised by 3.2 pct
* Shares flat, having dropped 11 pct since Sept. 24
By Sarah Young
LONDON, Nov 13 (Reuters) - British energy supplier SSE said it would cut a recent price rise for customers by up to half if the government moved green levies into the general tax system.
The government has said it will make an announcement in December on the plan to shift some of its environmental and social charges away from companies so they can reduce bills.
"We would look to implement and pass on any cost reductions that we receive from government," said Alistair Phillips-Davies, who took over as chief executive in July.
SSE, ranked second of the big six utilities, raised gas and electricity prices by 8.2 percent in October. It was the first in the industry to announce price increases which have been criticised by politicians and consumers.
The Scotland-based company said on Wednesday that its retail business slumped to an 89.4 million pound ($142.4 million) operating loss in the six months to Sept. 30. hit by high gas prices, rising distribution charges and the cost of government social and environmental policies.
"The retail side of things is quite tough and that shows what a difficult market that it is at the moment. Not only is it not that profitable, but you've obviously got all the political grenades flying around as well," Exane BNP Paribas Iain Turner said.
SSE's price hike, more than three times the rate of inflation, could fall by half to around 4 percent, Phillips-Davies told reporters, should other companies' forecasts of government cuts materialise.
EDF Energy undercut the competition on Tuesday by announcing a bill hike of 3.9 percent, pre-empting the government's promise to reduce the green taxes that the big six blame for their need to raise prices.
SSE's adjusted pretax profit at the group level came in at 354 million pounds, 12 percent lower than in the year-earlier period but the interim dividend was raised 3.2 percent and SSE said it was on track to increase the dividend by more than the rate of inflation for its 2013-14 financial year.
Utilities across Europe are blaming government policies for lower earnings and higher bills, with Germany's E.ON and France's GDF Suez also reporting weaker profits on Wednesday.
In Britain, opposition Labour leader Ed Miliband promised in September to freeze prices for 20 months if he wins a 2015 election. That wiped 1.2 billion pounds off SSE's value in two days in September. The shares have retreated around 11 percent since the Labour politician's announcement on Sept. 24.
Shares in SSE were down 0.3 percent at 14.01 pounds at 1216 GMT.
E.ON UK, the only big six player yet to raise its prices for this winter, said on Wednesday that it was "increasingly likely" it would need to pass on some of the cost rises it was experiencing.
Smaller supplier Co-operative Energy said it was cutting a previously announced 4.5 percent increase to 2.5 percent in response to the government's promise to reduce charges.
Separately on Wednesday, Britain's government auditor warned that it expected energy bills to rise at a faster rate than inflation up to 2030 due to the high levels of investment needed, and called on government to assess the impact of its policy decisions on consumer bills.
Britain's biggest energy supplier, Centrica, is due to publish an interim management statement on Thursday.