Customer service fine sees slump in earnings for ScottishPower

ScottishPower posted a slump in earnings at its gas and electricity supply arm after an £18 million fine for customer service failings and as mild weather saw households use less energy.

The Big Six provider, which has 5.4 million gas and electricity customers, said underlying earnings from the retail supply business fell 8.6% in the first six months of the year.

It was hit with the multi-million pound fine from Ofgem in April after the watchdog found it ''failed to treat its customers fairly'' when handling calls, dealing with complaints and billing following the roll out of a new IT system.

ScottishPower was blasted for ''unacceptably long call waiting times'', with the company receiving more than one million complaints between June 2013 and December 2015.

The Spanish-owned group said half-year earnings were also impacted by higher costs as well as the mild winter weather at the start of the year, with UK electricity and gas demand down by 2.1% and 0.3% year-on-year respectively.

But ScottishPower, which is part of the Iberdrola group, said overall UK underlying earnings edged 1% higher to £205.9 million as the retail woes were offset by a 121% surge in earnings at its wholesale and generation business.

The group cautioned over the impact of the Brexit vote, with the weaker pound meaning UK profits will be lower when translated into euros.

It also said a slowdown in the UK economy could knock demand for energy, although it said recent improvements in energy efficiency across Britain mean there is less of a direct link between gross domestic product and energy usage.

The group added its "significant geographical - and currency - diversification will offset any possible impacts" from Brexit.

Underlying earnings at owner Iberdrola lifted 1.4% to 3.9 billion euro in the first half, the group said.