Big freeze gives British Gas 98% profits hike
The coldest winter for 30 years helped the UK's biggest energy firm almost double first-half profits today.
Centrica said its British Gas residential arm posted a surplus of £585 million - 98% ahead of last year - as shivering households cranked up the heating and gas usage rose 8%.
British Gas was also helped by the addition of 223,000 new customers this year after it cut gas bills in February. Centrica pushed up overall operating profits 65% to £1.56 billion.
Centrica said its price cuts - plus increased energy efficiency measures - meant average bills for its 16 million customers were slightly lower last winter despite the fierce cold.
The firm also stressed British Gas profits would be mostly booked in the first half of the year as rising wholesale gas prices squeeze margins through the rest of 2010. Pressure will build for a hike in household bills if the upward trend persists.
Chief executive Sam Laidlaw said: "This is a competitive market so we can't give any signals but our position has always been to lead the market down and try to delay any price increases as long as we can."
Mr Laidlaw also warned of building pressure on consumers from tax increases and higher public sector unemployment as the impact of Chancellor George Osborne's emergency Budget are felt next year.
He added: "We are not out of the woods yet in terms of the recession and we are very mindful of not pushing through any price increases unless we absolutely have to."
Despite the huge profits hike at the residential arm, the British Gas services business saw operating profits fall 3% to £109 million as the big chill sparked a record level of callouts.
The company's engineers were repairing up to 35,000 boilers a day during the coldest period, the firm said, while volumes at its Rough gas storage facility in the North Sea fell to record low levels.
Centrica is looking to lessen its dependence on volatile wholesale energy markets through moves such as its acquisition of Venture Production and its 20% stake in nuclear power firm British Energy.
The group's oil and gas production arm grew operating profits by 45% to £485 million as a 41% rise in gas production offset lower average prices over the period.
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