Scottish Power expects to pay a £150 million carbon tax bill this year, prompting Spanish owner Iberdrola to complain about the tax’s impact on fuel prices.

The energy company’s operating profits increased by 3.3 per cent to £203 million in the first half of the year, but Iberdrola said the carbon tax introduced in 2013 had caused an 89 per cent rise in the cost of carbon and gas-fired energy.

It also said electricity margins had fallen because of a 3.3 per cent reduction in tariffs since the start of 2014.

The company said the combination of environmental taxes and transmission costs were responsible for the decision to close Longannet coal-fired power station “earlier than our previous estimates of around 2020”.

The company explained: “Losses in the generation business continue with carbon taxes jumping by £22m to over £60m, and on course for a £150m carbon tax cost in the full year. This means that the future of Longannet is kept under close review.”

Iberdrola chairman Ignacio Galán said: “Iberdrola is now beginning a new cycle of growth with investment set to be around four billion euros per year focused on regulated networks and renewables.

“Our strong financial position has enabled Scottish Power to invest more than £2 million every day in the first six months of 2015 to help keep the lights on, cut carbon and keep energy affordable in the UK.”