British Gas owner Centrica boosts profits

 

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The Independent Online

British Gas has come under pressure to drop its prices after a “shocking” 23 per cent hike in profits triggered a consumer backlash.

The UK's biggest energy supplier, owned by utility giant Centrica, admitted last year's hefty price rises helped its residential arm to an operating profits haul of £345 million in the six months to the end of June.

That equates to £1.9 million a day, or an average of £3.64p a month from the 15.8 million accounts its serves, sparking criticism it is making too much money.

Centrica put gas and electricity tariffs up by 18% and 16% respectively last August blaming higher wholesale costs, but this was followed by a drop of 5% in electricity tariffs in January when prices eased.

It claimed today's rise in profits was the result of weak comparative figures with the previous year when it had delayed passing on a price hike, while the cold start to this year's summer had boosted demand.

But consumer groups and unions said it needed to share more of the pain being suffered by hard-pressed consumers by dropping its prices, with some accusing it of profiteering.

Unison's head of business and environment Mike Jeram said: "British Gas seems to have side-stepped austerity Britain and passed the pain of the double-dip recession onto their domestic customers.

"How can it be right that families across the UK are suffering from pay freezes, job cuts and struggling to pay their fuel bills, at the same time as the company is posting a 23% profit hike?

"We need strong regulation and Government action to protect families and pensioners from profiteering."

Earlier this year, Centrica hinted of further price hikes after it warned its energy costs were continuing to rise, with wholesale gas prices 15% higher for next winter and other costs set to add £50 to the cost of supplying the average household this year.

Audrey Gallacher, director of energy at Consumer Focus, called for British Gas to commit that it would not increase prices for the rest of the year in the light of its profit figures.

She added: "Hard pressed consumers will be shocked to see such a big rise in profits when British Gas has been warning of the need for price increases.

"The disconnection between profits and prices risks deepening consumer distrust over energy bills."

Meanwhile, Ann Robinson, director of consumer policy at uSwitch, said: "These soaring profits show that British Gas could and should cut its prices ahead of winter.

"This would go some way to acknowledging the pressure customers are under as they struggle to afford their household bills."

Consumers have been struggling to cope with soaring energy prices in recent years, which have been one of the main drivers in inflation and have pushed the average dual fuel bill up to £1,310 a year - more than £200 higher than two years ago.

Centrica claims to control just 15% of a customer's bill through its operating costs and profit margins.

Chief executive Sam Laidlaw said: "Centrica has performed well in the first half of 2012 despite challenging market conditions, although the increase in earnings must be placed in the context of unusually low levels of consumption and profits in the UK in the first half of 2011."

Gas revenues jumped 21% in the first half of the year to £3.2 billion while consumption ticked up 3.5%. And electricity consumption was slightly lower at 0.1% while revenues for electricity rose 10%.

The stronger performance at British Gas helped the group's underlying earnings rise 14% to £767 million - slightly better than City expectations.

Its upstream gas and oil production business saw profits rise 28% to £682 million, buoyed by £1.2 billion of acquisitions.

The group previously announced a £1.4 billion investment with GDF Suez to develop a major North Sea gas field off the coast of Norfolk, creating some 4,000 jobs.

It is believed to be the largest gas discovery in the southern North Sea for 25 years.

PA

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