EDF Energy's UK Annual Profits Fall 25%

EDF Energy, one of the so-called big six suppliers to homes, has reported a 25% fall in annual profits at its UK operations.

The French-owned firm made a UK pre-tax profit of £649m in the 12 months to 31 December.

It did not give a breakdown of its generation and supply businesses but said that the effects of a mild winter last year were offset by customer account growth of 194,000 and continuing cost savings on the supply side.

EDF (Paris: FR0010242511 - news) , which said the profit figure reflected "challenging market conditions", added that it included a one-off charge of £136m relating to the reduction in value of gas generating and storage assets.

The performance was also hampered by unplanned outages at the company's Heysham 1 and Hartlepool nuclear plants in the second half.

Generation was suspended at the reactors in August after the discovery of a crack on a component known as a boiler spine at Heysham 1, a part also used at Hartlepool.

Both plants are now back online and EDF said it expected its nuclear output during 2015 to exceed that of 2014.

EDF announced its profits as a fierce debate continues to rage on whether households are paying more than they should for their energy given the 50% reduction in oil prices and 30% decrease in wholesale gas prices over the past 12 months.

The industry has consistently argued that prices are slow to come down because they buy raw energy up to three years in advance and wholesale prices make up less than half of a bill's total.

Cuts to standard tariffs are currently making their way through to customers but those fall well short of the wholesale price falls in percentage terms.

EDF said it had invested all its operational profit and more in its network during 2014.

Chief executive Vincent De Rivaz said: “Despite challenging market conditions, EDF Energy increased its investment in the UK.

"Customers will benefit from this long-term approach with more low carbon electricity for the future.

"Our spending on research and development has underpinned our ability to safely extend the lives of our nuclear power stations.

"At the same time customers are seeing very competitive prices, with an increasing number benefiting from our fixed tariffs."

EDF also confirmed it was to make an investment decision this year on its £16bn project to build two new nuclear reactors at Hinkley Point but added that negotiations could yet take some months.

Chief executive Jean-Bernard Levy said talks with EDF's partners, Chinese utilities CGN and CNNC and French nuclear group Areva, and the British Government were continuing.

"We are in the final phase of negotiations, but that phase can take a considerable amount of time, depending on the number of problems left to resolve," he told reporters.

The group's pre-tax profits rose 7.3% to €17.3bn.