Centrica gas price rise hits profit

Click to follow
The Independent Online

Centrica, the owner of the British Gas brand, disclosed yesterday that its domestic energy division is facing a loss for the year despite increasing prices by 22 per cent in February.

The price rise has resulted in the loss of 350,000 customers so far this year and an increase in bad debt levels. However, Centrica said that in recent weeks the level of customer losses had shrunk dramatically and it might even begin to gain new accounts over the coming three months.

Since the February price rise, the cost of wholesale gas for delivery this winter has risen by a further 17 per cent. "At current retail tariff levels, and without a drop in wholesale energy prices, British Gas residential energy would be loss-making," Centrica told its annual shareholders meeting.

Centrica said it had also incurred additional costs this year in its British Gas services division, which provides householders with boiler breakdown cover, because the cold winter weather had placed extra demand on its engineers. The company reiterated that it hoped to avoid any further increase in bills this year but could not categorically rule one out, saying it "remained committed to our policy of fully recovering costs over time".

A Centrica spokesman said it felt wholesale gas prices for this winter were "a bit overcooked" and could well come back down as new import capacity came on stream and the storage situation improved.

New pipelines delivering gas to the UK from Norway and the Netherlands are due to enter service by the end of the year and Centrica's Rough gas storage facility, out of operation since February because of a fire, is due to come back on stream next month.

The Rough fire will result in a £40m exceptional charge at the half-year, although Centrica said full-year results for its storage business would still be in line with market expectations because of higher-than-forecast prices.

Centrica shares initially fell 3 per cent on the announcement but they recovered some ground later in the day to close less than 2 per cent down.