BusinessCompany NewsScottish Power shares hit by accounting fears

Scottish Power shares hit by accounting fears

The Financial Services Authority is expected to investigate yesterday's trading in Scottish Power after the utility giant's share price plunged by more than 10% on apparently unfounded fears that the company's US unit is experiencing accounting problems.

According to this morning’s Financial Times, the London Stock Exchange is likely to refer Scottish Power to the Financial Services Authority before the end of the week, prompting an inquiry into whether the new offence of market abuse was committed.

Scottish Power insists the fears of accounting problems relating to electricity trading irregularities at its main US subsidiary PacifiCorp, raised in a newspaper report, are unfounded.

Scottish Power finance director David Nish, who is currently in the US, is understood to have telephoned London analysts to reassure them that the rumours were unfounded. A spokesman told the FT: ‘We are aware of the rumours and they are totally unfounded.’

PacifiCorp had previously written off $500m (£345m) against its US power purchases because of wildly fluctuating electricity prices in California and other states over the past two years.

The fears saw the company’s share price fall to its lowest level for five years and will reawaken the corporate accounting fears that have hit a number of companies, particularly in the US, in the wake of the collapse of Enron.

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