ENERGY giant Iberdrola felt the weight of legislative measures to improve domestic energy efficiency in the UK as it posted a 14.1% fall in first-quarter earnings to €878 million (£750m).

The ScottishPower owner said "front-loaded" costs involved in meeting the latest Government drive to reduce home energy bills had been the biggest factor affecting its the performance in the UK, where earnings before interest, taxation, depreciation and amortisation (Ebitda) fell 13.8% to €510.7m.

The company said its UK performance had also been distorted by adjustments to regulatory standards, adding that it expected to benefit when UK corporation tax was cut to 23% in the second half of 2013.

Iberdrola's operations are split into three main areas – regulated markets or networks, which covers wires, distribution and transmission; generation and supply, which covers power stations and retail; and renewables.

Its first-quarter report shows Ebitda in its UK generation and supply business dropped to €184m compared with €212.7m in the same period last year.

The firm said commitments imposed by the Energy Companies Obligation (ECO), which involves energy companies contributing to the cost of measures to reduce domestic energy bills, was the single biggest influence on the performance. It is understood it spent $42m on these commitments over the period, but added that their impact would lessen over the remainder of the year.

The amount energy firms must pay to help customers install new boilers, loft insulation, energy efficient wall cladding and cavity wall insulation varies according to how many customers they have. Iberdrola's overall commitment in the UK is expected to total €200m.

A spokesman said Scottish-Power's core retail business had performed well over the quarter, stating the company had offset the costs in meeting its ECO commitments by growing its customer base over the last year.

While the closure of its Cockenzie plant saw production decline by 15.4% in the UK over the period, sales rose on the back of lower temperatures, a 7.3% increase in the customer base and higher tariffs.

The firm highlighted a strong performance by its renewables division, with Ebitda in the UK rising to €106m on the back of improved efficiency and better wind yields.

Projects under construction that will bring a further 183mw of renewables power on stream for Iberdrola in the UK, including the Harstanes project in Scotland that will deliver 136mw.

Iberdrola's UK networks business saw Ebitda fall to €220m compared with €229m in the first quarter of 2012.

Shares in the group were unchanged at €3.94 yesterday