British Gas hikes prices as Centrica profit soars

 

Around 8.5 million households are to be hit with a 6% rise in their energy bills today as British Gas becomes the latest utility giant to hike its tariffs.

The move will add another £80 to the typical annual dual-fuel bill for a British Gas customer, or £1.50 a week.

There was mounting anger over the bill blow - first announced last month - after British Gas parent Centrica said it was set to make profits of £1.4 billion this year.

Experts also predict around £575 million of pre-tax profit from its British Gas residential arm after gas consumption for the first 10 months of 2012 rose 9% because of colder than normal weather.

Mike Jeram, head of business and environment at trade union Unison, said: "The billion pound profits of energy companies, announced at the same time as massive price hikes for their customers, are an insult to the many families who are struggling to get by as winter takes hold."

Audrey Gallacher, director of energy at Consumer Focus, called for rules forcing energy firms to tell customers about the link between bill rises and profits.

She said: "Consumers will be sceptical over supplier profits, given questions over how justified recent price rises have been."

"It is essential that all energy firms are required to provide information that is fully clear and comparable, including profit and trading information from across the whole of their business, if customer distrust is to be tackled," she added.

British Gas's bill increase comes amid a spate of tariff rises among the UK's "big six" power firms.

SSE was the first to increase prices, lifting bills by an average of 9% in mid-October, affecting about five million electricity customers and 3.4 million gas customers.

Npower follows with its increase on November 26, while EDF and Scottish Power will raise bills in December.

German-owned E.ON - the last of the utility firms to lift prices - is planning to announce an 11% tariff rise next month, which will come into effect in January, according to yesterday's Sun newspaper.

They have all blamed rising wholesale prices, which they say is out of their control.

But the sector has been embroiled in controversy this week after accusations of alleged wholesale gas price-rigging.

Regulators are now investigating claims made by a whistleblower to the Financial Services Authority (FSA) and energy watchdog Ofgem of alleged gas price manipulation on September 28.

All six of the big energy companies have released statements denying any involvement in attempts to fix the £300 billion market.

Centrica said on Wednesday night that an internal investigation "found nothing unusual" in its wholesale gas trading activities on the day when price manipulation was alleged to have taken place.

The group, which makes most of its profit from upstream gas and oil exploration, is expected to see a 6% profits improvement in its residential energy supply, driven by stronger trading over the first half of the year, with the figure forecast to be lower for the second half of the period.

Its trading update comes after rival SSE reported a 38% jump in half-year profits to nearly £400 million.

In yesterday's trading update, Centrica said competition in its division which supplies small and medium-sized businesses had cost it 43,000 customers since June.

The weak UK economy accounted for a 16% drop in the number of central heating installations in the first 10 months of the year.

But while the number of new accounts at its UK residential services business remained broadly flat, it was on track to deliver double-digit profit growth in the division.

In its UK upstream business, Centrica said it expects to increase production by nearly 20% this year as it brings the first gas to shore on North Sea projects including Seven Seas and Ensign.

Next year Centrica said it expects to increase UK production by up to 15%.

Centrica said its North America residential business continued to perform well this year despite a warmer-than-average winter in the first half of the year.

But continued low natural gas prices in the US were making it challenging for the upstream and wholesale business on the continent.

PA

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