Cold weather boosts British Gas profits

British Gas owner Centrica said its residential profits rose 80 per cent in the first half of the year due to last year's price hikes and a colder than average winter.

The energy giant reported operating profits of £299 million for the six months to June 30, up from £166 million in the same period last year.

It said lower consumption per customer during the period was "more than offset" by the effect of the increase in prices in 2008.

British Gas made a 10 per cent reduction in the standard gas tariff from February and a similar cut in electricity prices in May.

But the firm said it benefited from higher than expected demand from the chilly weather in January and February.

Profits for the whole Centrica business were down 5 per cent to £936 million.



British Gas also benefited from lower wholesale costs in the period.

The firm said this had allowed it to drop the price of energy for its residential customers, which had in turn enabled it to improve its competitive appeal.

British Gas Residential had just over 15.5 million customer accounts at the end of June, but this compares to the 15.6 million it reported for the end of December.

Revenues for the period were up 15 per cent to £4.38 billion.

While oil has risen fairly steadily from its lows at the beginning of the year the price of wholesale gas has remained depressed due to fears about global oversupply.

Centrica said this was partly because demand for gas from industry dropped in the first half of the year as companies responded to the financial crisis by temporarily closing sites.

The firm's upstream gas production business was hit by the reduction in wholesale prices, which contributed to the fall in group profits.

Centrica chairman Roger Carr said: "The economic environment is showing little sign of rapid improvement.

"The resultant drop in wholesale gas prices does benefit British Gas and its energy customers, but obviously has a negative impact upstream."

The group has attempted to reduce its exposure to the volatile wholesale markets by making strategic purchases in the industry.

It has dipped its toe in the nuclear power sector with a 20 per cent stake in generation firm British Energy after buying the stake from France's EDF for £2.3 billion in April.

The deal also involved it selling its Belgian business, SPE, and Centrica said it now expects to offload all its small downstream businesses in Europe to concentrate on the UK and North American operations.

It has also taken a 29.9 per cent stake in North Sea gas company Venture productions and has made a hostile takeover bid for the firm.

Buying Venture would enable Centrica to supply 60 per cent of its energy from its own assets and resources.

Centrica's net debt more than tripled in the period, from £511 million in December to £1.89 billion in June because of the increased investment in the business.

Mr Carr added: "The changes we have made and continue to make to the business model will make Centrica stronger as commodity prices remain volatile.

"With the industry facing massive capital requirements in the UK and North America to meet the challenges of security of supply and climate change there is no shortage of opportunities.

"Within our own business organic opportunities exist in gas development, renewables, new nuclear, gas storage and thermal generation."

Wholesale gas prices soared last year and Centrica said they did not pass on all of the increase to their customers.

Higher costs wiped more than two-thirds off British Gas profits last year, with the division's surplus falling by 69 per cent to £166 million.

The company said today that while customer numbers in the residential business had fallen in the first months of the year, the reduction in prices had sparked a turnaround.

It said by the end of last week it had 6,000 more customer accounts up on the end of December.

"This is due to us offering the cheapest electricity in the market, and also the cheapest dual fuel for those paying by direct debit," a spokesman said.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence