ScottishPower profits down 15 per cent

ScottishPower plc announced today profits for the year of �628 million, down 15 per cent on last year's figure of �736 million. The electricity and water group is seeking to increase shareholder value by restructuring its business into three distinct areas and looking to grow its business in the US.

The company's performance was in line with analysts' expectations but it has, by its own admission, faced a tough year. Despite this, dividends per share are being increased 5 per cent to 26.04 pence.

This year's financial results have been impacted by the outage at the Hunter power station in Utah at a time of exceptional volatility in the western US power markets. This led to power having to be purchased on the open market to cover the shortfall. The Hunter Station is part of ScottishPower's PacifiCorp business, a US utility that it acquired for about �7bn ($10bn) including debt in 1988.

Profitability has also been affected by tighter price controls in the UK following UK regulatory reviews. Operating profit for the year increased �9 million to �970 million, despite the impact of the outage and the regulatory reviews.

Chief Executive Ian Russell, who succeeded Sir Ian Robinson in April this year, said, "Our underlying business performance has been good and we have taken a number of steps to sharpen our focus on improving shareholder value. These include restructuring into three divisions to focus on growth in energy and firm action in the

US to capture opportunities in the western power markets".

The emphasis on the energy parts of the business confirms the view of those who see ScottishPower moving away from its multi-utility base. In future, it is expected to focus increasingly on its core electricity businesses both in the UK and US. Talks are underway with Enron to acquire Portland General Energy (PGE) from them. This would significantly increase its US west coast electricity business. The group has had limited success in cross-selling electricity and gas to Southern water customers in the UK and although it has achieved some synergies, analysts are increasing looking for a more focused approach.

The group will need greater liquidity if it is to grow its energy portfolio, and selling Southern Water appears to be the preferred option. Although a refinancing package is being considered to release value from Southern Water, a disposal seems more likely. Italian state-controlled energy group Enel is one of a number of companies thought to be interested in a takeover of Southern Water.

ScottishPower has already separated its telecommunications business when it created Thus. In 1999 it sold a 49.9 per cent stake raising �1bn.

PacifiCorp contributed operating profit of �351 million, after the impact of the Hunter outage, which was caused by the failure of a 430MW generating unit in November 1999. Actions have been implemented to counteract the financial impact of this event which was costing PacifiCorp $1m a day until the plant was re-commissioned this week. This has included managing debt exposure, vigorously pursuing regulatory recovery of power purchase costs, encouraging load reduction through demand side management, and introducing approximately 940 MW in new generation capacity.

In a separate move yesterday, ScottishPower launched a legal action principally against British Energy. The summons seeks the courts assistance in amending the terms of the agreement whereby it is committed to buying 75 per cent of Scotland's nuclear output until 2005. The contract would cost ScottishPower �1bn over the next four years. ScottishPower argue that the introduction of the New Electricity Trading Arrangements is a material change but have failed to come to satisfactory terms with British Energy during talks over the last 18 months.

Recommend this article Recommend this article () Yo recommended this article Yo recommended this article ()
Follow Power Engineering International on Twitter

Editor's Picks

China tops renewables investment poll but UK slips down

China is now the top destination for renewables investment in the world according to an influential poll published today.
PEi

Power Engineering International Magazine – latest issue

The latest issue of Power Engineering International Magazine is now online with some outstanding news and analysis of the ...

Gas-fired power dominated UK energy sector in Q2

A combination of coal-fired power plant outages and falling gas prices saw a surge in gas-fired power in the UK in the sec...
Mike Winkel of E.ON

E.ON calls for assistance in renewables investment drive

Germany’s largest utility says it can no longer afford to push large renewable projects on its own and is looking for part...
Wilhelmshaven

Molluscs force German coal-fired power plant to shut down

The 757 MW Wilhelmshaven hard coal-fired power plant has had to be temporarily shut down after North Sea mussels clogged t...

PEI Magazine Issues



>> Current Issue           >> Past Issues

Latest Wire News

Algae Biomass Organization Recognizes Six Students With Young Algae Researcher Awards at Algae Biomass Summit

Algae Biomass Organization Recognizes Six Students With Young Algae Researcher Awards at Alg...

Perma-Fix Environmental Services Announces $4.5 Million Service Contract

Perma-Fix Environmental Services Announces $4.5 Million Service Contract

MISO Confirms Benefits of MVP Projects

MISO Confirms Benefits of MVP Projects

Magnum Hunter Resources Declares Monthly Cash Dividend on Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock

Magnum Hunter Resources Declares Monthly Cash Dividend on Series C Preferred Stock, Series D...

Pledge to Rise Above Plastics With Surfrider This October

Pledge to Rise Above Plastics With Surfrider This October

Editorial Guides

How to cut your OPEX

How to cut your OPEX In a constantly evolving electricity market, factors such as over capacity and low coal costs can pu...

Alstom Editorial Guide: Thailand to showcase latest upgrade of Alstom's GT26 in combined-cycle

Read all about Alstom's new advanced GT26 gas turbine in the North Bangkok CCPP expansion project online with the Power En...

PLEXOS® Integrated Energy Model – Leading the Field in Energy Market Modelling

PLEXOS® Integrated Energy Modelling is an advanced software tool that employs the latest mathematical programming methods ...

Power Engineering International

Whitepapers

How to lower your total cost of ownership on DC Control Power

In this whitepaper, we look at implementing battery management solutions and how smart battery management effectively lowers the total cost of DC Control power systems and the risk of their failure...

Portfolio Optimization by PLEXOS

To achieve Portfolio Optimization, PLEXOS performs the Security Constrained Unit Commitment and Economic Dispatch using Mixed Integer Programming (MIP) to minimize a cost function subject to all op...

Evaluating cogeneration for your facility: A look at the potential energy-efficiency, economic and environmental benefits

The energy-efficiency, economic and environmental benefits of cogeneration are the subject of this in-depth white paper. The paper argues that producing electricity and heat/cooling from the same f...

The Effect of Moisture on the Breakdown Voltage of Transformer Oil

Power transformers utilize oil as a heat transfer medium and a dielectric material, together with cellulose. Breakdown voltage (dielectric strength) is one of the most important parameters of trans...

Improving Mission Critical Cooling Systems With More Reliable Level Sensing

The choice of coolant level sensor may seem like an insignificant detail when designing complex machinery such as emergency generators and cranes, but if this sensor fails, the operator has no warn...

Steps Towards a Low Carbon Future: Solutions and Technologies That Will Support the Global Revolution Required

A smart grid is becoming more and more essential as clean energy becomes more dominant. In addition, the demand for electricity is expected to treble the ability to supply it over the next decade. ...

Latest Digital Edition

  Power
  Engineering
  International
Look Inside >
Cover
Current Issue

Article Archives for Power Engineering International Magazine

Latest Energy Jobs

View more Job Listings >>