SCOTTISHPOWER more than doubled the profits it made in the household supply business last year in spite of the fall in demand for energy triggered by the coronavirus crisis.
The Glasgow-based energy giant made £220 million from the sale of gas and electricity to consumers and businesses in 2020 compared with £95m in the preceding year.
The results for 2019 covered the first year of the price cap that the regulator, Ofgem, imposed in respect of customers on variable tariffs.
Spanish-owned ScottishPower said the results for 2019 were adversely impacted by a change that was made by Ofgem in respect of the cap, which had a one-off effect.
However the results achieved by ScottishPower in 2020 suggest the retail business remains very profitable following the introduction of the cap.
The £125m increase in profits was achieved although the total demand for electricity and gas fell by six per cent and 3% respectively.
READ MORE: Increase in energy prices amid coronavirus crisis beggars belief
Ofgem recently agreed to increase the price cap by an inflation-busting 9.2%, £96, from April 1. It noted that wholesale energy prices had risen in recent months following a recovery in demand.
The cap was reduced by £84 after wholesale prices fell in response to the first wave of coronavirus infections.
Ofgem has tried to boost competition in the market, which has long been dominated by giants such as ScottishPower.
However, the ranks of competitors to the giants have been thinned in recent months.
In December Ofgem announced it was appointing ScottishPower to take on the 74,000 customers of Yorkshire Energy, which was ceasing to trade.
In January Ofgem said Green Network Energy and Simplicity Energy were ceasing to trade.
ScottishPower said it maintained customer numbers at around 4.7m last year.
READ MORE: Energy giant plans for big payouts to investors as it eyes renewables bonanza
A ScottishPower spokesperson said the retail business remained loss-making on a bottom-line basis. The £220m profit figure was stated before taking account of around £100m bad debt charges, including £58m additional provisions arising from the pandemic, and other significant operating costs.
Chief executive Keith Anderson highlighted the part the company had played in supporting the response to the pandemic in the UK.
“As we have all spent much more time at home, energy has become even more important. At ScottishPower we’ve had to pull together and work together with our employees, customers and suppliers to support the communities we serve,” he said.
“Throughout the pandemic we supported over 300,000 of our customers by offering help with their bills and options on how to pay.”
Mr Anderson said the fact ScottishPower has interests spanning the retail sector, renewable energy generation and transmission and distribution networks meant it could make a big contribution to the drive to cut carbon dioxide emissions.
READ MORE: Plans for huge hydro power plant in Highlands boosted by study findings
Describing the outlook for the company as strong, he noted: “Last year, ScottishPower committed to investing £10bn in in the UK by 2025 to help unlock Net Zero. This represents the highest level of sustained investment by ScottishPower in the UK and a boost to the Green Recovery.”
The investment will include spending on generating assets, on networks that will be required to carry output from them to market and facilities such as vehicle charging points. The company expects a significant share of the spending to be in Scotland.
ScottishPower announced yesterday that it will develop the world’s first hybrid energy park at Carland Cross in Cornwall. It will add solar generating and battery storage facilities to the existing windfarm at Carland Cross. Similar plants could be developed in Scotland.
The group increased total profits by around 25% last year, to £1.8 billion. From £1.5bn in the preceding year.
The renewables division increased profits by 46%, to £675m from £460m.
READ MORE: £100m windfarm deals highlight investor interest in Scotland
ScottishPower said the increase was largely attributable to the final commissioning of the giant East Anglia One offshore windfarm. This features 102 turbines.
“Much of the installation and connection work was completed during the pandemic, with ScottishPower transforming the construction process to get the job done,” said the company.
Increased production offset the effect of a fall in energy prices during the year.
ScottishPower’s networks arm grew profits to £890m from £867m.
The parent Iberdrola group grew underlying profits by 8% last year, to €10.7bn (£9bn).
ScottishPower has warned the price cap discourages consumers from shopping around. SSE sold its retail arm to Ovo for £500m last year.
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