ScottishPower warns government efficiency schemes could push energy prices up further

ScottishPower has warned that the rising burden of taxes and levies on energy companies means that further price rises for customers could not be ruled out despite stable energy costs in the market.

The company said yesterday that a 137.7 per cent rise in the cost of implementing government efficiency schemes (to €155.8m/£134m) in the first half of 2013 resulted in a 7.3 per cent drop in profits from its UK power generation and energy supply business (to €224.7m). This came despite revenue and growss margin increases from the cold weather and its customer base hitting a record high of 5.6m.

The Energy Company Obligation (ECO) scheme replaced the Carbon Emissions Reduction Target and Community Energy Saving programmes that came to an end at the close of 2012, and requires companies to help vulnerable customers and hard-to-treat homes. Companies that do not comply face fines of up to ten per cent of turnover. In addition, the carbon tax that came into effect on 1 April 2013 has already cost the company £10m.

Government estimates put the cost of the scheme at £1.3bn, or £50 per household per year, having no impact on consumer bills. But energy companies think differently, saying the scheme will cost them around £2.4bn or £94 per household.

ScottishPower said the ECO cost it €95m in the first six months of the year – expected to account for around 60 per cent of the total full year cost. Chief corporate officer Keith Anderson said he would endeavour to “hold these costs and protect customers” but that this would be challenging.

What the Department for Energy says, and we broadly agree with, is that you can see energy costs remaining stable and flat over the next period of time but there are increased cost pressures coming through.