UK: Energy provider npower profits soar
Energy provider npower’s profits soared by 41% to €724m last year, its parent company said today.
RWE said the jump for its UK arm, which generates power and sells gas and electricity, was down to “much higher” electricity generation prices. Revenues for 2007 were up 5% to €8.9bn.
The company did not break out figures for its UK retail business, which was the first of the major suppliers to hike household bills this year, upping gas prices by 17.2% and electricity by 12.7% for more than four million customers. Bosses blamed soaring wholesale gas and electricity costs.
As well as being the UK’s biggest fourth biggest supplier, RWE npower operates nine power stations in the UK – three coal-fired sites, four gas-powered and two oil-powered facilities, including Fawley in Hampshire.
An npower spokesman said: “We saw major performance improvements from our power stations in 2007 – which gave us an acceptable level of profit for the first time since 2003 even though our retail business actually had a very difficult year.
“Older power stations are closing and we need to invest in new stations to guarantee power supplies. Our new power station at Staythorpe will cost more than our entire UK profit in 2007.”
The UK energy industry regulator Ofgem also revealed it was launching an investigation into the country’s electricity and gas markets.
Npower put up household bills in 2006, before the firm cut gas prices by 16% and electricity by 3% at the end of April.
RWE said UK electricity usage in 2007 was down by 3% due to the warmer winter reducing home heating needs. But gas consumption was up 3% driven by an increase in the use of gas-fired power stations by energy suppliers to take advantage of cheaper wholesale gas prices.
RWE said the cost of buying CO2 emission permits fell by €59m to €114m, due to lower emissions and cheaper permits. But transmission and customer service costs rose.
The group added that it expected npower’s operating profits to come in lower this year due to the mounting cost of fuel, transmission costs and climate change regulations.
The group also cut its 2007 dividend by 10% as it rolled out its €30bn investment programme over the next four years. RWE also aims to triple its renewable energy generation by 2012, reducing CO2 emissions by nearly 40 million tons.
The group reported total net recurring income of €2.97bn last year, up 21% but less than analysts were expecting.
