Energia pays €40m dividend as generation arms offset retail losses

Energia, the private equity owned gas and electricity group, paid a €40 million dividend to its parent company in the year to March as earnings grew. Soaring wholesale electricity prices powered its generation arms even as its supply business slumped to an operating loss.

Earnings before interest, tax, depreciation and amortisation (ebitda) rose to €200.1 million from €194.1 million for the previous financial year, said the company’s annual report published on its website.

The company’s renewables unit, which owns 309 megawatts (MW) of wind assets and purchases electricity from 1,282MW of renewable generation capacity throughout Ireland, saw its ebitda soar 216 per cent to €211.5 million. Wholesale energy prices have surged since the outset of the war in Ukraine.

Energia’s flexible electricity generation division, owner of two so-called combined cycle gas turbine (CCTB) plans in Huntstown in north county Dublin, and which also procures power under contract from a 600MW gas-powered plant in the North, delivered a 68 per cent increase in ebitda to €104 million.

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This was driven by higher availability of its Huntstown 1 plant, which had a big outage in the previous year, higher electricity prices and a successful business interruption insurance claim following the failure of a generator transformer at its Huntstown 2 facility last year.

However, the customer solutions unit, which supplies electricity and gas to 316,600 customers in the Republic and 504,400 customers in Northern Ireland through its Energia and Power NI brands, swung into a loss of €115.4 million for the period from a €65.5 million profit the previous financial year as its margins were squeezed by rising wholesale prices.

The unit’s loss would have been larger, had it not booked part of the €49 million business interruption claim made by the Huntstown 2 plant.

Energia and other energy suppliers have hiked tariffs for customers a number of times in the past year amid spiralling wholesale prices. Most recently, it increased electricity and gas prices in the Republic by 15 per cent in May 2022, while a 27.5 per cent electricity price hike took effect in Northern Ireland at the start of this month.

“High commodity prices have continued to be experienced since March 31st, 2022 and are expected to remain highly volatile in the short to medium term. While the group is vertically integrated, the extreme volatility is expected to continue to impact segmental financial performance,” it said.

US-based private equity firm I Squared Capital acquired Energia, then known as Viridian, in 2016 for €1 billion. The company has regularly been the subject of sale speculation since then, most recently in late 2020 when it was reported that I Squared was planning to put the business on the market within months with a €2 billion price tag.

The €40 million dividend paid out last year was to its immediate parent, Energia Group TopCo Ltd, which is controlled by a Cayman Islands-based limited partnership. The dividend was in line with a distribution for the previous year.