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Rise in renewable use fails to offset effect of power station axe

A SURGE in renewable and hydroelectric energy production by ScottishPower thanks to a wet and windy winter was not enough to offset the impact of closing Cockenzie power station, leading to a fall in generation in the first quarter of 2014.

The Glasgow-based company reported a 2% year-on-year ­reduction in production in the UK to 5,701 gigawatt hours (GWh) in the first three months of the year.

Nevertheless, profit from its generation and supply activities rose nearly 8%.

There was a 55.4% increase in output to 281 GWh from ScottishPower's three hydroelectric plants at Cruachan in Argyll and Bute, Galloway and Lanark due to rainy conditions compared to a dry winter last year.

There was also a 17.3% increase in output to 1,600 GWh from ­ScottishPower's three gas-fired generation plants at Shoreham in Sussex, Damhead Creek in Kent and Rye House, Hertfordshire.

Renewable energy production in the UK, the bulk of which is from Scottish wind farms, soared 38.7% to 1,100 GWh thanks to much windier conditions than in the still winter of 2013.

The group said this led to a 32% rise in profits from the division.

However, coal-fired electricity production was down 22.2% to 2,688 GWh after the closure of Cockenzie power station in East Lothian in March of last year after a total of 45 years of operation.

ScottishPower also faced a fall in demand due to the relatively mild winter weather.

It said that demand for electricity dropped by 7.6%, while demand for gas decreased by 17.1%.

Despite the drop in production and cost rises including introduction of the carbon price floor, ScottishPower's Spanish parent Iberdrola said its UK generation and supply arm had recorded a 7.7% rise in earnings before interest, taxation, depreciation and amortisation to €197.7 million (£162.5m).

It was assisted by a rise in sterling of 2.5% against the euro.

In contrast, while Iberdrola's Spanish hydroelectric and ­renewable output grew, earnings in its home market were hit by additional regulatory costs.

ScottishPower put its prices up by an average 8.6% in December 2013 citing increased energy delivery charges and costs to support compulsory social and environmental schemes.

The increase was partially reversed in January

As of March 31, 2014, ScottishPower had 3.4 million electricity customers and 2.2 million gas customers, representing an increase of 100,000 on the same date last year.

ScottishPower's networks ­business produced a "solid performance", Iberdrola said with a 14.9% rise in EBITDA as a result of increased revenues from an expanded asset base following investment

Net profit for the group as a whole was up 8.4% at €952.6m (£782.9m), although excluding the sale of stakes in Portugese and Brazilian businesses, net profit was 4.6% down at €848m (£696.9m).

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