Mark Clare: Don't blame us for your bills, try telling that to 11 million households

A day in the life of the managing director of British Gas
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The Independent Online


Mark Clare, the managing director of British Gas, is up early on what he knows will be a "challenging day". A week ago, Mr Clare announced a 22 per cent rise in gas bills for its 11.1 million customers. Today, he must justify these price increases as British Gas's parent company, Centrica, announces annual profits of £1.51bn.

Mr Clare's car usually picks him up at home in Rickmansworth, just north of London, at 7am. Today it is due at 6.15am, because Mr Clare has lined up what could be a bruising round of early morning television and radio interviews. He just has time to pick up today's press cuttings, faxed to him at home every morning.

On route to the BBC's central London studios, Mr Clare is fascinated by the newspapers' coverage of the battle raging for control of the Spanish energy company Endesa. Germany's E.ON has launched a bid for Endesa in an attempt to scupper a deal that would see it bought up by its domestic rival Gas Natural. "The European question has been exercising us for some time," Mr Clare says. "We'd like to do business over there because they're doing business over here, but while we've made inroads into Northern Europe, it's very difficult."

What irks him is that E.ON has in effect been able to tie up the domestic market in Germany because it owns both a retail gas business and the country's gas supply network. Centrica, which does not have the same advantage at home, has been lobbying European regulators to liberalise the Continent's energy markets.

"Competition has worked hugely well for consumers in the UK," Mr Clare says. "We have the lowest domestic gas prices in Europe - 84 per cent lower than Germany - even after the price rises announced last week."


The media does not have much sympathy for Centrica's European difficulties. BBC Breakfast, Radio 4 and Radio 5 are more interested in the price rises versus profits question. Mr Clare's defence is twofold.

"Centrica's overall profits were not generated by British Gas's residential business, which made a loss in the second half of the year," he says. "And remember that 52 per cent of our profits went to the Treasury in corporation and petroleum taxes."

In other words, Mr Clare argues, Centrica's most profitable operations - its US ventures and its UK service business - have in effect been subsidising residential customers. In any case, he is unrepentant about Centrica's profits - the money is needed for investments to secure better gas supplies in the future.

"This is the only way to break the cycle of wholesale gas price rises," Mr Clare says. He points out that long-term deals signed with Norway, Holland and Malaysia, together worth £12bn (£7bn), will provide 10 per cent of Britain's gas supplies by next winter. "Sometimes we feel like we're bringing new gas to the UK single-handedly."

Maybe Centrica's recent diversification into non-core business areas such as financial services, telecoms and roadside recovery distracted the company at a time when it could have been tacking these issues? Mr Clare says not, even though the AA, the Goldfish credit-card business and the phone operation OneTel were offloaded within the space of two years or so.

"We took the AA from a position where it was making nothing to a business making £100m a year, but at the point when the energy market changed we decided to focus on our core business," he says. "As for Goldfish, it was originally a loyalty scheme for British Gas, which worked very well."

Rather, it is Europe's competition authorities that should have been tackling the gas supply crisis, Mr Clare says. "A very large pipeline has been built between Britain and Northern Europe, yet this winter it was half full at a time when our wholesale prices were four times those in Germany."


At nine, Mr Clare places a short courtesy call to Alistair Buchanan, the chief executive of the regulator Ofgem, who is "comfortable" with Centrica's announcements. Then he heads off to face another set of interrogators, the City's analysts, who are awaiting a briefing at the investment bank Goldman Sachs.

This time, he has his boss, the chief executive of Centrica, Sir Roy Gardner, for company, but the questions are similar. The analysts want to know how many customers British Gas expects to lose after its latest price rise - two increases last year cost it 600,000 households, and consumer groups such as Energywatch are already urging people to take their business elsewhere.

Mr Clare won't be drawn on a number for customer losses, but he claims they will be more modest. "Customers now understand this is a European issue that isn't just about British Gas," he says. "Since our competitors all face the same wholesale gas price increases they are raising prices too, so switching is a short-term gain for consumers."

Mr Clare argues that three-quarters of last year's customer losses after British Gas's first price increase came "at a time when people weren't so knowledgeable about what's been going on in this market".


Analysts briefed, Mr Clare spends the rest of the morning talking to print journalists, reiterating the case he has been making all day. He also points out that 2 million customers have signed up to new offers from British Gas, such as fixed-cost tariffs and online deals, that will shelter them from price rises.

Mr Clare is spending much of his time on the road, talking to Centrica staff all over the country. The board is keen to reassure employees about the difficult times facing the company, particularly in the context of an ongoing job-loss programme that reduced costs by £138m last year.

Today, however, Mr Clare's next appointment is elsewhere. As a non-executive director of BAA, he must attend a board meeting of the airports operator.


The afternoon is spent at BAA. Mr Clare is particularly interested in the progress of the construction of Terminal Five at Heathrow Airport. "We're very proud of the project," he says. "It's five times the size of Wembley, but it's on budget and should be completed ahead of schedule."


Before leaving BAA, Mr Clare dials into Centrica's daily conference call for senior management. It's a chance to get an update on the day's sales performance and any problems that have come up at its call centres. British Gas is overhauling what is one of the world's biggest billing systems, so he is keen to be kept informed.

On the way home, Mr Clare makes a vain attempt to plough through the backlog in his in-tray. Rather than spend more time tackling "challenges", however, he opts to study the nominations for British Gas's "Everyday Heroes", an awards scheme for staff.


Back in Ricksmanworth by seven, Mr Clare has one final important meeting, his 10-year-old daughter's school parents evening (he also has two older children at university). "For the most part, she has done really well, but we have identified a couple of areas where there is room for improvement," he says.

Will his own report be so impressive? At the morning briefings, the chairman of Centrica, Roger Carr, said a replacement for Sir Roy would be announced by the end of March. At one stage, Mr Clare looked a firm favourite to step up to the top job, but the fact the chairman has taken six months to make an announcement suggests an internal appointment is less likely.

"I like doing the job I'm doing," Mr Clare insists. "Roger will make a decision about what is best for Centrica."

If he gets the chance, that is. Rumours persist that Centrica is a bid target for Gazprom, the Russian giant. On that prospect, Mr Clare is guarded but definitely wary. "I've no idea what it would be like to work for a company like Gazprom," he says. "It's probably an issue for the regulators, but would we be able to continue delivering that crucial competition?"