Energy price cap and loss of customers hit ScottishPower

The introduction of the energy price cap and the loss of 120,000 customers as challenger suppliers continue to take market share off the Big Six hit profits at ScottishPower’s supply arm in the first half of the year.

Group-wide, Iberdrola posted a 16.6 per cent rise in net profits. Picture: Iberdrola.
Group-wide, Iberdrola posted a 16.6 per cent rise in net profits. Picture: Iberdrola.

The Glasgow-based utility, owned by Spanish energy giant Iberdrola, also said the very mild 2019 winter compared with 2018 that saw the Beast from the East also helped underlying earnings at the division fall to £48.8 million, a drop of 71 per cent.

Retail customer numbers fell to 4.75 million at the end of the second quarter of 2019 from 4.87 million in the same period in 2018.

However, its renewables arm saw earnings rise 4 per cent to £213.4m thanks to higher energy prices compensating for lower wind volumes in the second quarter.

Its SP Energy Networks also saw a similar rise in earnings to £417.2m.

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Chief executive Keith Anderson said the positive performance in the renewables and networks arm “reflects ScottishPower’s sustained delivery of innovative and green investments – the wind generation and new infrastructure we need to deliver the UK’s long-term net zero ambitions.

“As the first energy company to go 100 per cent green, we welcomed the legislation to underpin the UK’s commitment to Carbon Net Zero, and we’ve committed to investing £2 billion in 2019 to support the race to Zero,” he said.

“The UK now has the opportunity to use the Energy White Paper, expected later this year, to provide the framework that will allow the regulator, government and industry to efficiently and cost-effectively decarbonise the UK economy.”

Group-wide, Iberdrola posted a 16.6 per cent rise in net profits to reach €1.64bn (£1.46bn) in the first half and raised full year guidance.

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Ignacio Galán, group chairman, said: “This double-digit growth highlights the success of our business model, based on a commitment to clean energy, regulated assets with stable and predictable returns, and a well-judged geographical diversification.”

Meanwhile Yorkshire-based energy generator Drax said it is making good progress following the acquisition of renewable hydro and gas generation assets from ScottishPower, which was completed in December.

The sites including the Cruachan pumped storage hydro station, run-of-river hydro locations at Galloway and Lanark and a biomass-from-waste facility at Daldowie. Drax said integration is progressing well and it is pleased with the performance of the assets.

The acquisition helped Drax return to a profit after boosting earnings by £36m.

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It reported pre-tax profit of £4m for the six months ended 30 June, compared with a loss of £11m the previous year.