GLASGOW, Scotland (Bloomberg) — ScottishPower Plc, the U.K.'s biggest electricity company, said it could lose as much as $190 million after a generation unit failed at the Hunter plant in Utah's Emery County.
Part of the core of the 430-megawatt unit shorted on Nov. 24. The company expects the unit to be out of service for four to six months while repairs are made.
ScottishPower will have to replace energy lost during the period from the market at a time when energy prices are high. The outage will cost about $1 million a day at last week's prices. It said last month that sales rose 82 percent in the fiscal first half to $4.1 billion.
"It's worrying from the investors' point of view," said Andrew Stone, an analyst at BNP Paribas, in an interview. He has a "neutral" rating on the stock. "Looking across the sector, it's a bad day for utilities anyway," he added.
The Glasgow, Scotland-based utility has expanded through acquisitions and last year became the first foreign company to buy a U.S. electric utility when it acquired PacifiCorp. The Utah unit is one of three at the 20-year-old, 1,200-megawatt plant and produces 5 percent of the total power from ScottishPower's PacifiCorp business.
ScottishPower's shares fell as much as 30.5 pence, or 6 percent, to 477.5 pence, their lowest price since March.
"This outage is an extremely rare occurrence in exceptional markets," said Colin McSeveny, ScottishPower's media relations manager, in an interview. The company plans to try to recover the costs "through the regulatory process," he added.
There's no guarantee the company will be able to recover the costs, Stone said, adding that it is unclear how long ScottishPower will continue to incur the daily losses.
"It has created some uncertainty," and the company already has two other regulation cases continuing in Ohio, he said. "I don't think it's drastic, but it's certainly serious."