Centrica accused of monopoly profits

Centrica, the owner of the British Gas brand, came under attack yesterday after announcing a threefold increase in profits from its domestic gas business to £172m.

Consumer watchdogs claimed that the huge increase proved British Gas was raising its charges to boost profits rather than to cope with higher wholesale gas prices.

The 213 per cent increase in residential gas profits for the first six months of the year came after two separate price rises in April last year and this January totalling 10 per cent.

However, British Gas paid the penalty with a 12 per cent decline in the amount of gas sold and a 4 per cent fall in customer numbers, taking its market share down to 65 per cent or 13 million customers.

Sir Roy Gardner, Centrica's chief executive, defended the increase on the grounds that it had made just £3m profit on domestic gas sales of £4bn in 2001 after absorbing some of the increase in wholesale gas prices itself.

"Our price increases were lower than the industry average and in price terms we remain very competitive," he added.

However, Ann Robinson, chairwoman of Energywatch, renewed her call for British Gas customers to boycott the company and switch supplier. "It's a simple choice. Save yourself money, or make money for British Gas, she said.

Sir Roy also disclosed that he is to meet the European Competition Commissioner, Mario Monti, later this month to press home the case for an opening up of Continental gas supply markets – particularly those in France and Germany.

"It is unacceptable that the French domestic market remains closed which is why we are taking the stance we are," he said. "We are making representations at every level."

The big increase in gas supply profits helped Centrica to increase overall pre-tax profits by 25 per cent to £350m. Profits from its home services division – which spans everything from three-star boiler servicing to plumbing and home appliance repair doubled to £22m.

The company is now seeking to hire an extra 3,000 engineers to exploit what it sees as the huge potential for more business and is launching a marketing drive depicting its British Gas fitters in their familiar vans with the blue flame logo as the "local hero".

Centrica's AA road services division increased profits by 14 per cent to £24m, helped by an 8 per cent increase in members to 12.6 million while telecoms profits rose by a third to £4.7m.

Centrica is still mulling the possibility of entering the domestic water business but said the prices being fetched by water supply businesses were too high. Another area of expansion is the marketing of home improvement loans using the British Gas and AA brands.

The recently launched Goldfish Bank cut its losses to £17m and Sir Roy said he expected it to break into profit in 2004. Launch costs so far have reached about £130m.

Centrica's North American energy supply business, which now serves 4.6 million customers, saw profits fall by 14 per cent to £25m after a £20m marketing drive.