One of the five warmest winters of the 20th century depressed demand for PowerGen's electricity, the generator confirmed yesterday.
Profits before exceptional items were therefore up only slightly on 1996, the generator's annual results showed, by 1% to #580m from #575m, from sales of #2932m, up from #2898m.
However, PowerGen's decision to revalue its UK power stations down by #369m meant profits before tax dropped to #211m.
''Competition in generation is intense,'' chairman Ed Wallis admitted, and called for a shake-up in the way the ''pool'', or electricity wholesale market, is organised.
PowerGen said it wants the Government to introduce full two-sided bidding, which would mean a more traditional-style market where the supply companies and the generators match bid and offer prices.
Wallis said that the opening up of the electricity market to full competition would create opportunities to improve customer service.
PowerGen said it managed to negotiate new supply contracts with the regional electricity companies (Recs) during the year, at lower price levels from which consumers should ultimately benefit.
The company also confirmed it will sell its offshore oil and gas interests as it has decided it would be too expensive to find and develop new fields.
But PowerGen declined to comment on whether it has identified a Rec to buy, although it confirmed it was still looking.
Looking ahead, PowerGen said it would continue to look for opportunities to expand overseas in countries where energy privatisation is less far advanced, and the market less crowded, than in the UK.
But despite the difficult market, the company is still raising its final dividend for the year to March 29 to 20p giving a total of 29p, up 15% on the year before.
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