ENERGY giant ScottishPower increased the profits it made from the sale of gas and electricity to consumers by 170 per cent in the latest quarter helped by price hikes but lost around 100,000 customers.
The Glasgow-based energy giant said its retail arm made £161.1 million underlying profit in the three months to September 30 compared with £59.4m in the same period last year.
The rise was partly driven by an increase in prices from June, which added around £64 a year to the average bill for customers on variable tariffs.
Read more: ScottishPower warned to keep prices down as it shifts to 100% wind energy
In August Spanish-owned ScottishPower announced a further rise that will add £46 to those customers’ annual bills from this month.
The company said the third quarter numbers reflected an improvement in its performance following a poor year for the retail business in 2017.
The company is aiming to deliver a profit margin of between 3% to 4% of sales revenues for 2018, which it reckons is line with other retail sectors.
The retail arm lost money on sales in 2017, with a margin of -0.3%.
However, news of the sharp increase in profits at ScottishPower may inflame the controversy about the prices charged by the firm and its rivals in the big six that dominate the energy market.
Other big six firms have increased prices in recent months, during which a range of smaller players have persuaded customers to defect.
ScottishPower saw customer numbers fall to 4.8 million at September 30 from 4.9m at June 30.
A study by Ofgem released earlier this month found ScottishPower, SSE, EDF, British Gas, npower and E.On lost 1.4 million customers in total in the year to June. They saw their combined market share fall by around five percentage points, leaving smaller players with around 25% in total.
Read more: Big Six energy firms feeling squeeze of new players
However, the regulator said 54% of households were still on a poor value default deal rather than a fixed price contract in April compared to 57% in October last year.
The Government said the findings strengthened the case for the price cap that is being imposed on default tariffs, amid claims from power firms that it will discourage people from switching suppliers.
A ScottishPower spokesperson said: “We think that the best way to bring down the cost of energy in the long term is by supporting lower cost and greener energy options like onshore wind. This is now the lowest cost form of large-scale electricity generation in the UK.”
Scottish Power announced last week that it will become the first major UK energy supplier to generate all its electricity from wind power. The company has agreed to sell its last gas and hydro stations to the power company Drax for £702 million.
Read more: Investment in renewables paying off for ScottishPower and SSE
Scottish Power’s renewables generation business increased earnings by 19% in the third quarter, to £266.7m from £224.7m last time.
The company said it increased wind energy production by 7% year on year in the quarter following the completion of a £650 million investment programme to build 8 new onshore windfarms in Scotland.
Chief executive Keith Anderson said: “Our largest UK investment project - the construction of the £2.5 billion East Anglia ONE offshore windfarm - is also progressing well. We expect first generation of electricity next year.”
The conventional generation business made £8.8m profit in the third quarter after losing £26.1m last time.
The company’s networks business grew earnings by 4% annually, to £591.1m, in line with expectations.
Mr Anderson noted: “We are delivering a smarter and more robust grid system to support renewable energy connections, and to ensure the network can meet the challenges associated with the expected increase in electric vehicles.”
ScottishPower increased total third quarter earnings before interest, tax, depreciation and amortisation by 25% to £1.03bn from £0.825bn.
Parent Iberdrola made €2.09 billion (£1.8bn) net profit in the nine months to the end of September, 13.5% below the same period last year. It said: “This result was impacted by lower extraordinary income in the period … and the worsening performance of Generation and Supply in Spain, in marked contrast with the positive business results elsewhere.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here