ScottishPower faces backlash over surge in profits

Published on Sunday 21 May 2006 00:50

ENERGY bosses at ScottishPower are set to face another backlash from customers this week when the firm reports huge profits following massive hikes in prices for electricity and gas.

The power giant is expected to reveal a profit increase of up to 40% in the past year to around 655m.

But the huge profits are likely to enrage consumer groups and customers after the firm imposed a 15% rise in gas prices and an 8% increase in electricity rates. This comes after several banks, utilities firms and supermarkets reported record profits, attracting criticism from consumer organisations for hammering customers with unnecessarily high charges.

ScottishPower will be bracing itself for a repeat of the backlash suffered by competitor British Gas, which this month admitted it had lost more than 350,000 customers after hiking prices by 22% while making 1.5bn in profits.

Analysts predict that ScottishPower's profits before one-off items for the past financial year will rise from 459m to 655m.

The company is expected to claim the improved figures are a result of efficiencies in performance and growth across all of its divisions, particularly in its renewables business.

But they are also expecting the company to hold fire on any further price rises in a bid to appease customers.

ScottishPower has faced internal upheaval over the past year after chief executive Philip Bowman was brought in to replace Ian Russell, sparking fears the firm would be sold off.

Bowman is also expected to announce his plans this week for a new slimmed-down ScottishPower following the sale of its Pacificorp division in the United States.

Energy consumer groups last night issued a guarded warning to the firm about its profits.

A spokesman for watchdog Energywatch said: "We will be watching closely to see which parts of their business profits have come from.

"We will be interested to see how much the household and business consumers are contributing to that profit."