Big Six energy provider ScottishPower yesterday unveiled a 35 per cent hike in full-year profits, as the Spanish-owned group benefited from lower wholesale gas and coal prices, and falling CO2 emission costs.
The results came as the Competition and Markets Authority (CMA) claimed customers of the major players were paying up to £234 a year too much in gas and electricity bills.
The regulator, conducting an ongoing probe into the UK energy industry, said 95 per cent of dual fuel customers could have saved an average of between £158 and £234 a year by switching tariff or supplier.
However, ScottishPower boss Keith Anderson said he believed the CMA’s initial findings suggested it had found that the energy market was “relatively competitive”, even if it was legitimate to examine why consumers were not switching suppliers more.
His remarks came as ScottishPower also announced another retail energy price cut – its online fixed price contract to March 2016 comes down to an average of £918 for dual fuel customers paying by direct debit.
This is down from the £930 implemented on 20 January this year and more than £150 less than a year ago. Anderson, head of Spanish utility giant Iberdrola’s UK arm since 2012, said the timing of the latest cut on the day of the CMA probe update was “purely and utterly coincidental”, and driven by recent price competition in the market.
ScottishPower revealed that annual earnings in its core generation and supply arm jumped £96 million to £368.3m last year from £272.1m in the previous 12 months.
Lower international coal prices helped the Longannet plant, while the closure of the Cockenzie coal-fired plant in 2013 contributed to “significantly lower” CO2 emission costs.
The supply business got a boost from non-energy factors, including improved efficiencies and the partial release of a previous provision.
“Life has been kinder to us [in 2014]. Coal generation has been very positive for us, particularly in the early part of the year,” Anderson said.
Electricity demand fell 9 per cent and gas demand about 14 per cent, partly due to the mild winter, which followed the wettest UK winter in more than 250 years in 2013-14.
UK renewables’ earnings also lifted 14 per cent last year, aided by a maiden contribution from Iberdrola’s first offshore wind farm, West of Duddon Sands, which became operational in October 2014. The weakness of the euro currency contributed 7 per cent of the profit uplift at ScottishPower.
The UK performance helped underlying earnings at its Spanish parent rise 3 per cent to €6.96 billion (£5.12bn), with the robust outturn in UK generation and renewables partly offsetting tough regulatory changes in Iberdrola’s home country.
ScottishPower also said it would spend a further £1.3bn in UK investment in 2015, similar to last year, as part of a three-year programme to pump some £3.3bn into the UK’s creaking energy infrastructure to 2016.
Most of the money is going into upgrades of power transmission and distribution networks in Scotland, north west England and north Wales.
The Scottish business said it would also hire one-third more graduates and apprentices this year – 130 compared with 85 in 2014.
“These are engineering roles,” Anderson added. “The whole of the UK is suffering from a lack of experienced engineers. We [have decided] if we cannot get them, we will train them.”
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