SCOTTISHPOWER has seen pre-tax earnings soar by £58m to hit £1.6bn - but has lost millions on household bills which was partly blamed on energy price caps.

The Glasgow-based energy giant's underlying group profits rose by 3.6% on 2021 - improved with renewables earnings buoyed by windy conditions last year.

But ScottishPower said it had made a loss of £18m in its retail business – which, with 4.7 million customers, is the sixth biggest supplier – dropping from a £3m profit the year before.

The firm said it had been hit by people using less energy in the cost of living crisis and "recoverability issues" in relation to the energy price cap.

The hit came through the cost to ScottishPower of buying energy at higher prices before the household dual fuel bill energy cap was raised restricting the prices companies could sell energy for during 2022.

Following Russia’s invasion of Ukraine a year ago, energy markets in Europe hit record highs, adding to economic pain in countries reeling from the impact of the Covid-19 pandemic. The price of gas surged pushing up already high wholesale gas costs, as well as power prices.

Around 1.5m Scots households saw their energy bills soar by up to £693 a year after the energy market regulator Ofgem hiked the price cap by the biggest increase yet in April, 2022.

From then three in four customers on default tariffs paying by direct debit saw an increase of £693 from £1,277 to £1971 while the rest who are on prepayment meters - and tended to be among the most vulnerable - saw a rise of £708 from £1,309 to £2017.

As the bills cap was due to soar by 80% to £3549 in October, the UK government brought in an energy price guarantee, limiting average dual fuel household energy bills to £2,500 from October.

The introduction of the price cap for customers was an attempt by Ofgem to put an end to suppliers exploiting loyal customers and allow consumers to pay a fairer price for their energy. It was seen as a safety net for customers who do not regularly switch and who are on standard or default tariffs – typically a supplier’s most costly charges.

ScottishPower said it hopes to recover a “significant proportion" of the losses incurred fron its retail business during 2023 through changes to the energy cap this year.

The Herald:

Cornwall Insight has predicted that the Ofgem energy price cap would hit £3,294 from April, and then stay at about £2,150 from July until the end of the year.

Bills are still expected to rise in the short-term, as the government energy price guarantee, rises by £500 to £3,000 from April. A £400 one-off rebate will also not be replicated, leaving households worse off.

In an indication over how households and businesses cut their energy usage amid higher bills, ScottishPower said that total volumes of gas it supplied to households, sourced from wholesale suppliers, dropped by 18.3% in 2022 while electricity use was down 4.5%.

ScottishPower's earnings boost emerged from its owners and Spain’s biggest utility firm Iberdrola which expects its net profit to soar by eight to ten per cent this year from 2022 – discounting the country’s windfall tax that could dent that.

Iberdrola posted a net profit of €4.34bn (£3.8bn) in 2022, an increase of 11.7 per cent.

Profits in ScottishPower’s renewables business, including Whitelee, the UK’s largest onshore windfarm, near Glasgow, rose 24% to £730m, helped by windier weather, selloffs of IT and offshore assets, and higher energy prices.

Its onshore wind farms pushed out a huge amount of power compared to the year before. Production was up 34.8% to more than 4,400 gigawatt hours (GWh). Offshore wind production fell by 1.2%.

ScottishPower is planning to invest £10bn into the green recovery by 2025. It aims to nearly double its renewable generation capacity, adding a further 2.4 gigawatts (GW) by the middle of the decade.

The Herald:

As concerns over rising energy prices grew last year, ScottishPower chief executive Keith Anderson pushed governments for a taxpayer-backed £100bn fund to help energy firms freeze energy bills.

Mr Anderson presented his plan as he attended a special summit by the First Minister Nicola Sturgeon last August to discuss what can be done to mitigate the impact of soaring energy bills.

Mr Anderson has now called on government to allow renewables projects to be developed more quickly.

“The extreme volatility in the energy market has reinforced the urgent need to decarbonise the economy,” Anderson said. “A crisis caused by fossil fuels can only be fixed for the long term by speeding up investment in the fuels of the future. Clean energy and green grids are the answer. We need to build more and we need to build them faster.

“That’s why we’re doubling down and accelerating investment in renewable generation and smart grid technology at record levels, and creating a 1000 new green jobs this year to help us deliver.”

Two weeks ago, energy giant BP said that it planned to slow its retreat from oil and gas as it made bumper profits from the fossil fuels. Its climate targets for the end of this decade were also watered down as a result.

The government has faced pressure to fix the energy price guarantee at £2,500 rather than raising it to £3000 from April.

Cornwall Insight estimated that ignoring those calls would save the government £2.6bn. It predicts the estimated cost will be £26.8bn, while if it were to remain at £2,500, the cost would be £29.4bn, far lower than previous estimates owing to the fall in wholesale gas prices.