British Gas has pledged to keep a lid on future price hikes after the energy giant admitted it made a bumper profit thanks to the prolonged winter.
Britain's biggest energy provider, which saw its profits leap by 11 per cent last year after increasing its gas and electricity prices by 6 per cent in October, said yesterday that it had made even more money in the first four months of this year as customers used 18 per cent more gas to keep warm.
As a result, British Gas – whose 10 million household customers paid an average of £1,188 for their dual-fuel bills last year – pledged to sit on the extra cash it has made this year and use it to keep prices down.
"Recognising the economic pressures facing many of our customers, the board has determined that any benefit arising from the exceptionally cold weather will be used to maintain our price competitiveness," a spokesman for British Gas's owner, Centrica, said ahead of a testy annual meeting in London yesterday.
"We will use that [cold weather benefit] to effectively hold prices for as long as possible," he added.
Consumer groups broadly welcomed the move, although some questioned why it had not been done earlier. Heading a protest outside the AGM, James Granger of Fuel Poverty Action said: "It raises questions over Centrica's previous statements that margins are too tight to reduce prices – it looks like it's trying to save face because of the public backlash."
Adam Scorer, at Consumer Futures, added: "The Big Six usually tell customers that it is swings and roundabouts, that they sometimes make a profit and sometimes a loss. This is the first time I've heard one of them say that it's the right thing to do to use the extra money to curb prices rises.
"Centrica is so concerned about the toxicity of distrust in the energy market that they have decided they need to do something about it."
The company stopped short of committing not to raise prices, and would not say how long British Gas would keep a lid on prices, which had been expected to rise by an average of 7 per cent this year across the Big Six providers. Instead, it said it would subsidise energy bills to the point where profits for British Gas came in at about the same level as last year – £606m.
Centrica's decision is a far cry from February, when the chief executive, Sam Laidlaw, announced strong profits and defended them on the basis that it needed to make a "fair and reasonable return so that we can continue to make our contribution to society and invest". This would enable the company to provide "a vital source of energy to the UK", he said, adding that while times were "difficult" for households, British Gas should not have held back on price rises to protect consumers.
A Centrica spokesman denied the latest announcement amounted to a U-turn, arguing that the winter was so long and cold it gave scope to make such a move. And its chairman, Sir Roger Carr, told a shareholder who asked about the rising level of fuel poverty, that while "none of us can be anything less than concerned … we have to make money, we are not a welfare operation".
The TUC called Centrica "insensitive beyond belief" in March when it emerged its five top executives received £16.4m in total last year. British Gas's outgoing managing director, Phil Bentley, saw his total package jump to £3.1m from £2.1m in 2011. However, Centrica's remuneration package was voted through by more than 93 per cent of shareholders yesterday.Reuse content