ScottishPower sees earnings recover thanks to Beast from the East boost
The energy giant last week announced a 5.5% average price hike for standard variable rate customers.
ScottishPower has revealed a 247% earnings rebound in its retail supply arm thanks to the Beast from the East cold snap, less than a week after it announced a price hike for 950,000 households.
The Big Six provider said first quarter underlying earnings in its generation and supply business jumped to £131.7 million as homes cranked up the heating in the freezing temperatures seen in late February and early March.
It marks a recovery after earnings in the division crashed a year earlier amid unusually mild winter weather.
But the figures come after last Friday’s price rise blow, when it said it would increase its standard variable gas and electricity prices for around a third of its customers from June 1, with impacted households facing an average increase of 5.5%.
ScottishPower, which is owned by Spanish firm Iberdrola, attributed the price rise to an increase in wholesale energy costs, alongside costs associated with upgrading meters and delivering electricity from low-carbon sources.
It comes amid the latest round of tariff increases, with British Gas and EDF also last week unveiling price rises, raising their standard variable rates by 5.5% and 1.4% respectively.
Customers will rightly be asking why the price rise was necessary, given the £131 million in profit that has fallen into the company’s lap Lily Green, Look After My Bills
Lily Green, digital campaigner for auto-switching service Look After My Bills, said: “Last week, they hit their most loyal customers with a price rise and then this week announce a profit surge.
“Customers will rightly be asking why the price rise was necessary, given the £131 million in profit that has fallen into the company’s lap.”
ScottishPower said the first quarter results showed a welcome recovery after a tough 2017, but warned over a challenging year for the sector ahead of the Government’s planned price cap and ongoing competition from smaller players.
It revealed customer accounts fell by around another 100,000 to 5 million in the first quarter as it continues to come under pressure from increased switching.
This follows the loss of around 200,000 accounts last year.
Chief executive Keith Anderson said: “The improvement in generation and supply follows a very difficult 2017, which delivered one of the weakest performances for the business in the last decade.
“The first three months of the year has seen the business recover to a level just below the first quarter in 2016.
“With the price cap pending this year, we still expect a challenging environment for the retail business in 2018.”
The wider Iberdrola group saw underlying earnings rise 24% to 2.32 billion euros (£2 billion) in the first three months of 2018, thanks in part to the better UK performance.
Net profits for the group lifted 1.2% to 838 million euros (£733 million).