ScottishPower profits rise 8% sparking customers' anger

A RISE in ScottishPower's full-year profits to £1.3 billion was yesterday branded indefensible as people struggled to afford to heat their homes despite falling wholesale prices.

The earnings were revealed by the utility's parent, Spain's Iberdrola, alongside a 1.3 per cent dip in group profits to 2.82bn (2.48bn), which chief executive Ignacio Galan said reflected "one of the most difficult markets ever seen". Spain was particularly tough, he said.

But McKinnon & Clarke, an energy consultancy that is one of the UK's largest buyers of power for industrial and commercial users, said ScottishPower – where profits were up 7.9 per cent – had failed to cut domestic standard tariffs in almost a year. This was despite wholesale prices tumbling 60 per cent since 2008.

David Hunter, energy analyst at M&C, whose clients include Federal Express and Arsenal FC, said: "Failure of the big six (UK energy] suppliers to pass on to customers the massive reductions in wholesale energy prices is scandalous.

"This is an impossible position to defend."

Marieke Dwarshuis, director of Consumer Focus Scotland, said:

"Wholesale prices have decreased dramatically, but have not been passed on to consumers. If energy firms persist in not doing the right thing by their customers, it is time for the industry to be investigated by competition experts in order to identify what needs to be done to deliver fairness."

A ScottishPower spokesman responded to the criticism by saying: "We constantly evaluate our costs and our retail prices and compare our position against the competitive market."

Stripping out currency moves, Iberdrola said its Scottish subsidiary's underlying earnings fell 3.5 per cent to 1.45bn, while UK energy production was 1 per cent lower. Galan said ScottishPower's performance was helped by an 8 per cent cut in its costs over 2009.

Iberdrola also unveiled a 4.5bn investment programme in the UK over the next three years – primarily in green energy and nuclear power – as part of 18bn in global spending between now and 2012.

Iberdrola has been awarded a massive zone for offshore wind development off the Norfolk coast, which Galan said had the potential to be among the biggest in the world, with up to 7,200 megawatts of generation.

It has also received consent for an offshore farm in the Irish Sea south-west of Barrow-in-Furness; is evaluating building a new nuclear power station with partners at Sellafield; and has started a carbon-capture test unit at its Scottish Longannet power station.

Referring to recent claims that Britain could face energy blackouts without extra capacity in years to come, Galan said: "We are here to help solve these things."

The Iberdrola chief was relaxed about the Scottish Government's decision not to allow new nuclear build, but to maintain the existing Scottish nuclear plants until their natural lifespan ends – by 2016 for Hunterston and 2023 for Torness.

"The nuclear plant that has been approved for the rest of the UK is enough," Galan said.