Energy: Power firm says it can't resist pressure to raise prices

Energy: Power firm says it can't resist pressure to raise prices

Scottish and Southern Energy yesterday issued a warning to its 9 million customers that they face further increases in their gas and electricity bills this year.

The Perth-based group's chief executive, Ian Marchant, told shareholders at its annual meeting SSE was continuing to resist pressure to put up prices for domestic customers but "doing so is becoming more difficult by the day".

Its warning came as ScottishPower, owned by Iberdrola of Spain, reported a surge in first-half pre-tax profits to €898m (£708m) and said these would have topped €1bn but for the pound's depreciation against the euro. Sterling's 11% decline caused a €130m earnings hit.

Energy groups are warning of savage price increases this winter, particularly for gas. Centrica, owner of British Gas, has spoken of a 70% rise, leading to fears that the number of the "fuel poor" could rise from 4.5 million to about 6 million.

The average British gas bill has more than doubled in the past five years to £646 a year while electricity bills have jumped from £244 to £412. But bills are among the lowest in the European Union, according to European commission figures.

Marchant said: "The extent of the energy shock with which the entire global economy is having to contend has been well documented and its full impact on prices for electricity in the UK has still to be felt." Retail prices lag six months behind crude oil costs.

SSE also.....continued below

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warned that its own first-half earnings, due out on November 12, would be "substantially lower" than in the past two years because of volatile markets. It said full-year results to March 2009 would show a "modest increase" and the group would deliver 4% real dividend growth "at least".

Iberdrola reported a 36.5% surge in first-half pre-tax profits to €3.3bn, with 60% of its earnings coming from renewables and its international businesses. The Spanish group, which also reported a 78% leap in net profits to €1.96bn, said ScottishPower had benefited from higher output and lower operating costs as well as increased charges to customers.

Iberdrola, which plans to install 18 gigawatts of renewable capacity by 2012, has made ScottishPower one of the main engines of its growth strategy. It said it expects group net profit to exceed €3.5bn by 2010.

guardian.co.uk © Guardian Newspapers Limited 2008