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Profits at Vitol’s UK power generation company almost tripled last year as power prices soared, underscoring the financial boost that extreme market turmoil has given generators.
VPI now has five power stations in the UK and made an adjusted profit of £644m, compared with £222m in 2021, according to the company’s accounts disclosed to the Financial Times. Adjusted profit excludes changes in the value of energy contracts purchased in advance to manage supply commitments. Unadjusted profit soars to £1.3 billion in 2022 from £86.1 million in 2021.
Wholesale electricity prices in the UK soared last year due to gas supply disruptions caused by the Russia-Ukraine war and a drop in generation in France, which normally exports power to the UK.
Rising prices have pushed up energy bills, with the price cap on UK household bills climbing from £1,277 in October 2021 to £4,279 in January 2023.
Vito’s power company was formed in 2013 when the commodities trader bought a power station in Immingham, North Lincolnshire, from Phillips 66.
The company acquired four gas-fired power stations from Drax in January 2021, bringing their total generating capacity to about 3.5 gigawatts, enough to power about 5 million homes.
Its fleet can respond quickly to demand, for example, by adding to its fleet if supply from wind turbines or other intermittent sources is interrupted.
Last year, the company was hit by a Bloomberg investigation that said traders at companies including VPI would notify National Grid that they would shut power plants ahead of periods of tight supply to ensure higher prices on the market for “backup” supplies. review.
Ofgem, the UK’s energy regulator, has also investigated market behaviour, and said last week it found evidence of some generators shutting down on winter afternoons but offering to restart at “significantly increased prices” in the standby market.
Ofgem has not named any companies involved, but has introduced new licensing conditions to limit the practice.
VPI said it was a “responsible provider of grid generation capacity” and was “in compliance with all delivery obligations and all applicable regulations”.
A spokesman added: “[VPI]has an open and transparent relationship with system operators and relevant regulators. Any advice otherwise is incorrect.”
VPI declined to comment on last year’s electricity prices. The company’s 2022 results were also flattered by the Drax asset, which it didn’t own in January 2021.
Rival firm SSE, which owns similar gas-fired power stations, reported a 244% rise in adjusted operating profit at its gas-fired power station division to climb to £1bn in the financial year to March 2023.
Vitol said it was “very aware of the challenges facing households” and highlighted plans to invest more than £1.5bn over the next five years.
“VPI’s focus must be on delivering the reliable electricity that people and businesses need today, and investing in the new electricity we will all need tomorrow,” the spokesperson added.
“As we move towards net-zero emissions, the energy system will require additional capacity and technology.”
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