British Gas owner stokes profit anger
Energy provider's results set to prompt backlash as fuel poverty grows and utility bills rise
The backlash against the “big six” energy providers will intensify this week when British Gas-owner Centrica announces a profit leap in the face of growing fuel poverty and high utility bills.
Centrica is expected to unveil a group operating profit of about £2.5bn for 2011 on Thursday, up four per cent on 2010, according to consensus analyst estimates.
It comes against a backdrop of growing fuel poverty, with more than 5.5 million UK households spending at least a tenth of their disposable income on gas and electricity.
Audrey Gallacher, director of energy at Consumer Focus, said: “Many consumers are struggling to afford high energy bills and are concerned over whether pricing is fair. Customers will be confused further by firms announcing healthy profits.”
Centrica, whose chief executive is Sam Laidlaw, is expected to say on Thursday that its British Gas residential unit, which supplies about 10 million households in the UK, saw its profits decline by about a quarter in 2011, to around £550m.
The division was hit last year by a combination of very warm weather and growing austerity. It was also squeezed by rising wholesale gas prices, which reduced the profits made by its gas-fired power stations and actuallypushed them into a loss between April and August last year, before they hiked their prices.
However, while the rise in the price of wholesale gas squeezed one part of Centrica, another part – its oil and gas exploration and production unit – benefited from the increase.
Although the British Gas residential supply arm reported a decline in profits, its services business – which repairs boilers and plumbing and insures against their damage – is forecast to see its profit increase 12 per cent to £269m.
Including flat profits at the business supply and services division, British Gas overall profits are expected to fall by a more modest 14 per cent in 2011, according to analysts.
Some believe that the big six energy companies have come in for an unfair hammering in recent months.
Dominic Nash, an analyst at Liberum Capital, said: “I sometimes feel that utilities are unfairly blamed for high energy prices. A combination of high gas costs and government initiatives have led to costs rising beyond their control.”
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