Scottish Power profits slump as customers flee

Account numbers fall from 5.5 million to 5.3 million in three months

Scottish Power profits have slumped after its customer numbers fell from 5.5 million to 5.3 million in the three months to the end of June.

Earnings before interest, depreciation and amortisation (EBITDA) across its generation and supply, renewables and networks businesses totalled £591.5 million over the first half of 2017 – a 19 per cent fall on the same period last year.

Most of the damage was inflicted by the generation and supply arm, which saw its EBITDA plummet 76 per cent to just £48.8 million. Scottish Power said the business was negatively impacted by milder weather, with domestic gas sales down 8 per cent year-on-year and domestic power sales down 7 per cent.

The customer exodus comes after the supplier hiked the price of its dual fuel tariff by 7.8 per cent from the end of March.

“In retail, we have seen fierce competition in the UK and we expect this to continue for the foreseeable future,” said Scottish Power chief corporate officer Keith Anderson. “Even with this backdrop, our customer numbers are stable and we have still retained more of our customers over the last 5 years than any other large supplier.

“We will continue to work hard to offer customers good value products, and continue to lead the large suppliers in encouraging customers to move away from standard tariffs. Abolishing standard tariffs is more effective than any price cap in ensuring more customers are on the best value deals for them.”

SP Energy Networks also saw its EBITDA fall by 4 per cent to £388 million, driven by the timing of its investment programme for the RIIO price control for electricity distribution.

Scottish Power Renewables was the only business to report an increase in profits. EBITDA grew 32 per cent to £153.7 million owing to better wind conditions and increased generation capacity. Onshore wind output shot up almost 44 per cent to 1.7TWh, whilst onshore generation increased nearly 14 per cent to 387GWh.

“Investment continues at pace in major infrastructure,” said Anderson. “We are nearing the completion of a £650 million programme to deliver eight new onshore windfarms and we are starting full construction of the £2.5 billion East Anglia One offshore windfarm.”

He said the business hopes to have a planning decision on the proposed 1.2GW East Anglia Three offshore wind project later this summer.

Meanwhile, SSE has also revealed that its customer numbers fell by around 230,000 to 7.77 million over the three months to the end of June. The company announced a 6.9 per cent increase its dual-fuel tariff beginning towards the end of April.

“As expected, 2017/18 is presenting a number of complex challenges to manage, but SSE is a focused, resilient and adaptable business with efficient operations and disciplined investment at its core,” said SSE chief executive Alistair Phillips-Davies in a first quarter trading update.

In November 2016, the company announced its intention to return to shareholders around £500 million of the proceeds from the sale of a 16.7 per cent stake in gas distribution network SGN through a share buy-back scheme.

As of 14 July, the company had bought back stock worth around £323 million, including £192m of shares purchased since the beginning of April. The process is expected to be completed by the end of 2017.