Scottish Power profits surge despite customer losses

26 July 2018 (Last Updated July 26th, 2018 15:31)

Energy supplier Scottish Power has reported a significant increase in underlying earnings at its generation and supply unit, despite losing 100,000 household accounts in the last quarter.

Scottish Power profits surge despite customer losses
The firm has reported a significant increase in earnings despite losing 100,000 household accounts

Energy supplier Scottish Power has reported a significant increase in underlying earnings at its generation and supply unit, despite losing 100,000 household accounts in the last quarter.

Customer numbers now stand at around 4.9 million, down from the five million reported at the end of the first quarter of 2018. The loss of customers was partially due to heightened competition in the industry, as well as Scottish Power hiking up its standard gas and power tariff by 5.5%.

The new, higher price came into effect on 1 June and impacts around 950,000 households, representing about a third of its customers. The firm said the bump in price was necessary due to wholesale electricity costs, as well as expenses associated with upgrading meters and delivering electricity from low-carbon sources.

The decision comes ahead of a government clampdown on standard energy tariffs, with a price cap planned for the end of this year. The Scottish firm’s increased tariff is the same as that set by British Gas in April, while EDF Energy announced a 1.4% increase in the same month.

Energy Minister Claire Perry said the rise was “unjustified” and “extremely disappointing”.

Despite the loss of customers, the utility giant has reported the first half profits from generating and supplying energy has surged to £161.6m, four times the amount seen in the previous year.

Scottish Power CCO Keith Anderson said the increase in profits was due to energy demands rising by around 4% during the ‘Beast from the East’. This contrasts to the milder winter of 2017 which led to a dip in profits.

Anderson has also said that the company will attempt to pursue profit margins around the 4% point this year, marking a return to margins typical of a ‘normal year’.

In addition, Scottish Power has celebrated the milestone achievement of installing one million smart meters in the last quarter. It worked alongside four partners across the UK, deploying 2,700 meters a day on peak days with a nationwide workforce of more than 500 people.

Anderson said the development of a smart energy system could be as ground-breaking as the advent of smartphones, saying the meters “will be a vital cog in a smart network that supports electric vehicle charging, manages locally produced renewable energy and even the storage of electricity at home”.

Despite the benefits of the scheme heralded by the company, the programme received numerous criticisms, with publications such as The Guardian reporting people’s complaints that the Scottish Power smart meters did not work. The Telegraph also stated that a group of MPs have objected to the smart meter programme, calling for an investigation into the scheme which cost £11bn yet, they say, may only save consumers £11 each year.