British Gas owner Centrica fuelled outrage over spiralling household energy bills today by banking profits of £1.51 billion.
The company posted the 11% profits rise for 2005 just days after slapping an extra 22% on gas and electricity bills from March 1.
It was the fourth such price rise in two years for its 17 million customers, although Centrica today insisted the increases were not enough to offset soaring wholesale costs, as British Gas made losses of £75 million in the second half of 2005.
Centrica said most of the improvement in group profits - up from £1.36 billion in 2004 - came from its gas production and storage operations, not from British Gas, where annual profits were down 63% from £242 million to £90 million.
It came after an "unprecedented" rise in the cost of wholesale gas, which cut into margins as Centrica chose to carry some of the burden itself.
The cost of wholesale gas has tripled since 2003, compared with a 70% rise in household energy bills over the same period.
Centrica chief executive Sir Roy Gardner said: "In 2005 we saw the highest wholesale and power prices since Centrica was formed in 1997, and the greatest year-on-year rises in the cost of both fuels.
"This clearly presented a massive challenge for all energy retailers and in particular for British Gas, as the largest supplier of both gas and electricity to the residential marketplace.
"With the unprecedented rise in commodity costs we chose not to pass through the full impact immediately to our customers.
"This led to a substantial fall in British Gas operating profits with an operating loss in the second half."
Centrica became the fifth supplier to raise prices or announce new tariffs in 2006 when it made its announcement last week.
Consumer group Energywatch said it was the "blackest day yet" in more than two years of spiralling energy prices.
"This is the most serious single event in two years of trauma for energy consumers," said Energywatch chief executive Allan Asher.
But Sir Roy said: "Despite the latest price rise, we're still shouldering some of the burden of high wholesale prices in 2006."
Centrica pointed out that the cost of wholesale gas rose 43% in 2005 and has risen by a further 63% so far this year. By contrast, bills went up 14.2% in September and will go up a further 22% next week.
"British Gas as a standalone business would not survive," said Sir Roy.Reuse content