Fines for poor service and milder weather hit ScottishPower profits
Hefty fines for customer service failings and mild winter weather at the start of the year have hit earnings at ScottishPower's gas and electricity supply business.
The Glasgow-based Big Six provider, which has 5.4 million gas and electricity customers, said underlying earnings from the retail supply business fell 8.6 per cent in the first six months of the year.
Its ScottishPower Renewables arm also saw a steep fall in earnings, down by 34.4 per cent, mainly due to reduced wind output against a record performance in the same period last year.
Spanish owner Iberdrola cautioned over the impact of the Brexit vote, with the weaker pound meaning UK profits will be lower when translated into euros.
It also said a slowdown in the UK economy could knock demand for energy, although it said recent improvements in energy efficiency across Britain mean there is less of a direct link between gross domestic product and energy usage.
But the group added its “significant geographical – and currency – diversification will offset any possible impacts” from Brexit.
ScottishPower was hit with an £18m fine from Ofgem in April after the watchdog found it “failed to treat its customers fairly” when handling calls, dealing with complaints and billing following the roll out of a new IT system.
The company was criticised for “unacceptably long call waiting times”, with the firm receiving more than one million complaints between June 2013 and December 2015.
The group said half-year earnings were also impacted by higher costs as well as the mild winter weather at the start of the year, with UK electricity and gas demand down by 2.1 per cent and 0.3 per cent year-on-year respectively.
But ScottishPower said overall UK underlying earnings edged 1 per cent higher to £205.9m as the retail woes were offset by a 121 per cent surge in earnings at its wholesale and generation business.
Underlying earnings at owner Iberdrola lifted 1.4 per cent to €3.9 billion in the first half.