John Swinney puts pressure on power giant as it agrees to £10m scheme

UNDER-fire energy giant ScottishPower and the Scottish Government have agreed to work together on a £10 million campaign to improve household energy efficiency after finance secretary John Swinney yesterday presided over a high-level meeting to discuss the firm's recent inflation-busting price hikes.

ScottishPower's UK retail director, Raymond Jack, and chief executive for generation, John Campbell, were summoned to talks after the firm earlier this month raised the average yearly household bill for both electricity and gas to just under 1,400.

The campaign will see some households benefit from upgraded insulation and heating systems.

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However, The Scotsman understands that the 10m is not additional investment and will come from a 20m pot already earmarked by ScottishPower for these kinds of improvements across the UK.

Following the meeting, Swinney said: "ScottishPower's price increases remain deeply concerning and I again reiterated that to the company.

"All power companies need to play their part and do everything possible to mitigate the impacts of price rises, especially for vulnerable customers."

He added that he was awaiting an update from regulator Ofgem on how it intended to address "unacceptable" price hikes across the industry.

Richard Baker, Scottish Labour's finance spokesman, welcomed the move to improve energy efficiency but expressed disappointment that there was no extra money involved. "It would have been preferable if there was a greater investment in this campaign," he said.

ScottishPower yesterday came under renewed pressure after it emerged that the firm had extended an 800 million loan to its US sister company in 2009.

The revelation raised fears from Westminster MPs that the energy giant - which is owned by Spanish utility Iberdrola - was "milking" British consumers to help fund overseas operations.

The suggestion that ScottishPower had "surplus" liquidity available to lend to other Iberdrola divisions also raised eyebrows over its claims that it could no longer absorb large rises in wholesale energy prices.

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But a spokesman for ScottishPower yesterday insisted that it was standard procedure for global firms to move cash around within the company and that the UK had benefited from 2.7 billion of investment from Iberdrola since 2007.

He added: "This transaction has no connection with operational business decisions. Since the integration with Iberdrola in 2007, ScottishPower's debt level has been reduced and 2.7bn has been invested in the UK. We are investing 3bn on a mixture of renewables, networks enhancements and low carbon projects."