Milder weather and less wind hit profits at ScottishPower owner Iberdrola 

Less wind fuelled a 25 per cent fall in underlying profits to £84 million at ScottishPower’s renewables business in the first three months of the year.

Milder weather also contributed to a 3 per cent fall in underlying profits to £174m at the company’s retail and generation business – which includes the supply of power to domestic and business customers.

And scheduled infrastructure investment knocked 6.8 per cent off earnings at ScottishPower’s distribution and transmission business, which manages the company’s power lines and pylons.

But the Glasgow-based supplier, which is paying an £18m fine to regulator Ofgem for poor customer service during an IT changeover, said it was continuing to invest in the UK – and announced what is believed to be Europe’s largest wind turbine contract for a single project.

“ScottishPower remains on track to invest over £1.3 billion in the UK this year, in line with our five year plan to invest over £6.3bn,” said ScottishPower chief corporate officer Keith Anderson.

The new wind turbine contract is worth around £830m and will see German engineering group Siemens supply 102 wind turbines to ScottishPower’s East Anglia ONE wind farm in the North Sea off the Suffolk coast. This will support many of the 3,000 jobs the £2.5 billion project is expected to create.

“East Anglia ONE is the first of up to four projects we would like to build in the Southern North Sea, and we hope that our plans will stimulate jobs and investment for the UK and across the region for decades to come,” Mr Anderson said.

cottishPower’s Spanish parent Iberdrola said a 27 per cent fall in electricity produced from its onshore and offshore wind farms in the UK had negatively impacted earnings in the three months to the end of March 2016. However this compared to a record first quarter for wind in 2015. ScottishPower Renewables runs sites including the UK’s biggest onshore wind farm, at Whitelee on Eaglesham Moor south of Glasgow, and has smaller projects in South Ayrshire and Lanarkshire.

“When we build a project, it’s based on years of monitoring the wind conditions on that site, and the UK and Scotland have got some of the best wind resources in the world and certainly Europe,” a spokesperson said.

Milder weather in the first three months of the year also meant customers were using less gas and electricity. The company supplies 5.4m domestic and business customers in the UK.

Infrastructure investment programmes are agreed eight years in advance with the regulator, so the 6.8 per cent fall in underlying earnings to £244m at ScottishPower Energy Networks was expected, the spokesperson said.

Bilbao-based Iberdrola, which is Spain’s largest power company, said underlying operating profits – stripping out one-off items that boosted earnings a year ago – fell 6 per cent to €2.08bn (£1.62bn)

The company was also hit by falling power prices, with wholesale costs in Spain falling to about €30 per megawatt-hour in 2016 from about €48 in 2015, according to Deutsche Bank.

Iberdrola, which has more than 30,000 employees and 30m customers in Iberia, the UK, US, Mexico and Brazil, said investment rose by over 50 per cent in the period to €896m (£696m).

The company, which employs most of its 6,600 UK staff in Scotland, has about 5,000 megawatts under construction in onshore and offshore wind farms and generation power plants with long-term contracts.

Energy regulator Ofgem announced on Tuesday that ScottishPower had failed to treat customers fairly due to problems with call handling, complaints resolution and billing. This had resulted in more than 1m complaints between June 2013 and December 2015.

Up to £15m of the £18m penalty is to be paid to vulnerable ScottishPower customers who were affected by the poor service.