ScottishPower has conceded that the Californian energy crisis will cost it $300 million more than its original projection of $200 million, an admission that has slashed analysts’ end of year profit forecasts for the group and wiped £1 billion of its share price. The new figures also forced ScottishPower to defend its US acquisition strategy after a year in which successive losses have severely damaged its profitablity.
This latest debacle comes after the breakdown of Hunter power station at the demand peak knocked $160 million off the group’s first half profits.
Company chief executive Ian Russell has maintained that SP’s US subsidiary PacifiCorp had no choice other than to buy into the forward electricity market at a time when prices had hit $200 per MWh. When the price fell to $30 Pacificorp were left facing huge losses on power they could not offload at the higher price. Nonetheless SP maintains that the acquisition trepresents a solid base for growth in the US market; it hopes to claw back through the regulator a sizeable proportion of the losses.