UNDERLYING profits in Scottish Power’s production and supply arm fell by almost 50 per cent during 2017, with higher wholesale costs, milder weather and the loss of another 200,000 retail customers all having an impact.

Overall the business stream’s earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 49.3 per cent, from £240.3 million in 2016 to £121.9m.

The supply side caused the greatest drag on the total figure, with EBITDA from that arm more than halving from £203.6m to £98.5m.

This is due in part to customer numbers continuing to fall at the same time as warmer weather during 2017 led to a fall in the amount of gas and electricity remaining customers were using.

At the end of the year customer numbers stood at 5.1 million, 3.1 million of whom bought electricity from the company and two million of whom bought gas. The total was down from 5.3 million the previous year and 5.5 million in 2015.

The volume of electricity being supplied, meanwhile, fell by 6.7 per cent while the volume of gas being sold by the company was down by 7.7 per cent.

The generation side of the business experienced a less dramatic fall in EBITDA, with the figure dropping by 36.2 per cent, from £36.7m to £23.4m.

The company said its non-renewable UK production levels fell by 27.8 per cent to 7,259 GWh during the year “due largely to the closure of the Longannet coal-fired plant”.

Fife-based Longannet Power Station, which produced around 9,000GWh each year, closed in early 2016.

Scottish Power chief corporate officer Keith Anderson said the “challenges” faced by the generation and supply business had been anticipated “predominantly in light of increasing input costs, reduced demand, challenging market conditions and political uncertainty”.

Scottish Power Energy Networks – the part of the business that provides power for other companies to supply to their own customers – had a better year, with EBITDA falling by 2.8 per cent from £799.1m to £776.6m.

While milder weather resulted in supply volumes falling by 3.2 per cent year on year, customer numbers remained steady at 3.52 million.

Scottish Power Renewables was by far the best performing part of the overall company, thanks to a two-year programme of investment in eight onshore windfarms completing.

The business stream saw EBITDA rise by 44.6 per cent over the course of 2017, from £218.5m to £316.1m. Mr Anderson said the increase can be directly attributed to the company’s £650m investment in onshore wind.

“We now have more than two gigawatts of wind power capacity and the £2.5bn East Anglia ONE offshore windfarm is well in to construction,” he said.

Scottish Power is owned by Spanish company Iberdola, which intends to continue investing in the UK despite what its chairman Ignacio Galan termed “recent political and regulatory uncertainty”.

Mr Galan said that Scottish Power plans to invest €6.1 billion in green and smart infrastructure over the next five years with the aim of focusing on “increasing our renewable energy capacity, enhanced grid networks and smart technology for customers”.

He added that the company’s focus over the next 25 years will be to encourage people to use more electricity as a means of combatting climate change.

“More and smarter power will enable us to decarbonise faster as we electrify the economy where it matters most now – in transport and in heating,” Mr Galan said.

Over 2017 Bilbao-headquartered Iberdola, which also has operations across the US, saw its total revenues increase by 8.7 per cent to €31.3 billion. Its underlying profits fell by 7.6 per cent to €7.3bn while net profits rose by 3.7 per cent to €2.8bn.