The retail arm of ScottishPower, which supplies gas and electricity to 4.8 million households, plunged to a loss in the first quarter of this year as the company was forced to absorb the cost of surging wholesale prices not yet passed on to its customers.

Earnings at the retail business fell £12 million into the red, down from a profit of £106m in the same period a year earlier, as the price it pays for gas on the international market soared to record levels. These costs only began to be reflected in consumers' bills from the beginning of this month after regulator Ofgem raised its price cap by £693 per year for the average UK household.

The energy price cap is meant to ensure that consumers are not charged unfairly. It is reviewed every six months, after which suppliers are allowed to raise prices to cover any increase in their costs.

READ MORE: Glasgow-based ScottishPower sees customer numbers fall

Some 30 UK suppliers have gone bust since August when gas prices began surging along with increased demand as the global economy began its recovery from the pandemic.

The renewables division of Glasgow-based ScottishPower fared better, with quarterly earnings up 20% on the same period a year earlier at £250m.

About 40% of the £41m improvement was attributed to increased production, with weather conditions favouring ScottishPower's wind farms. The rest was the result of higher energy market prices.

ScottishPower, which is owned by Spain's Iberdrola, made total earnings of £497m during the three months to the end of March, down by £62m or 11% on the same period a year earlier. This included a £250m contribution from its energy transmission division.