The Courier & Advertiser (Perth and Perthshire Edition)
Power chief warns price cap could distort energy market
INDUSTRY: Crisis over Government pledge to cap bills for consumers
Scottish-Power has hit out at Government plans for a price cap on gas and electricity bills.
Chief executive Keith Anderson said the Government should instead make the “bold move” to scrap standard variable tariffs (SVTs) and use price caps as punishment for firms that fail to move customers on to better value fixed deals.
His comments follow a warning from Iain Conn, chief executive of British Gas parent Centrica, that the proposed price cap could turn his group into a loss-making business.
The issue erupted at the weekend when Work and Pensions Secretary Damian Green said a cap on energy prices will be introduced if the Conservatives are returned to power in the general election in June.
Mr Anderson said customers needed to get used to switching regularly to ensure they are on the best tariffs.
Scottish-Power hiked its SVT prices last month, raising the cost of electricity by an average of 10.8% and gas by 4.7%, amid the latest round of increases in the industry.
“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,” Mr Anderson said.
“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.”
He was speaking as Scottish-Power revealed its first-quarter trading figures.
The group’s retail supply business saw profits fall by £81 million due to higher costs and mild weather conditions at the start of the year.
The closure of Longannet power station in Fife last March also had a significant impact on the generation and supply division, contributing to an overall 73% plunge in underlying earnings to £47m.
However, the group stemmed the numbers of customer account losses.
Total electricity and gas customers edged up to 5.5m from 5.4m a year earlier as it focused on offering attractive fixed rate deals.
ScottishPower’s Spanish parent company Iberdrola saw group net profits fall 4.7% to £704.8m in the first quarter of the year.