Commenting on a potential British energy retail price-cap, Keith Anderson, Chief Corporate Officer at Scottish Power, said: “A potential price cap could harm competition, so the bold move by government would be to set a deadline to abolish standard variable tariffs and get every customer on a fixed-price deal instead – a recommendation we made two years ago to the Competition and Markets Authority inquiry.
“Just as you insure your car every year and go to the market for the best deal for you, so every energy customer should engage with the market at least once a year to make sure they are on the best deal for them.
“The government could impose a target that two out of three customers should be on a deal by the end of 2018, and all customers on a deal by the end of 2019 with SVT abolished once and for all. Any company that fails to meet these targets should have a price cap not only imposed but retained until all their customers are on deals.“
Meanwhile, higher non-energy costs and the closure of the Longannet coal-fired power station have combined to depress profits in the first quarter of this year at Scottish Power.
Profits at its UK Generation and Supply division decreased by £45 million with the closure of Longannet Power Station – a key factor in the comparison to 1Q2016.
The Retail (household supply) business was down by £81 million due to increases in non-energy costs, mild weather conditions and tighter margins.
And at the same time customer accounts have increased slightly to 5.5 million (3.29 m electricity, 2.21 m gas), against approximately 5.4 million in 1Q2016.
Profits in the company’s renewable division rose by 7% to £90 million this year, compared to £84 million in 2016.
Renewables has increased against a backdrop of higher production for Q1 2017 with 1,164 gigawatt hours (GWH) generated against 918 GWH for the same period last year.
More than £168 million has been invested in Scottish Power renewables in the first quarter of 2017, with several major contracts placed for the East Anglia-1 offshore windfarm, which will begin full construction this year.
Anderson, commented: “We anticipated the closure of Longannet would result in a year-to-year fall in the generation business.
“But we have seen an uplift in renewables, due to stronger production, and the Networks business is performing in line with expectations.
“The retail business has seen a reduction due to tighter margins, increasing non-energy costs and mild weather. We have increased our customer numbers year-on-year, and we have also increased the number of customers actively on a fixed product. More than half of our customers are now on a product rather than the standard variable tariff, which is the best of the major suppliers.
“Margins across the industry are tight because competition has been increasing, and switching numbers remain high. We will continue to work hard to get even more customers on to products.”