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.

ebooksNow available in paperback
Arts and Entertainment
Johnny Depp no longer cares if people criticise his movie flops
Arts and Entertainment
All in a day's work: the players in the forthcoming 'Posh People: Inside Tatler'
TVGrace Dent thinks we should learn to 'hug a Hooray Henry', because poshness is an accident of birth
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)

Presents unwrapped, turkey gobbled... it's time to relax

Arts and Entertainment
Convicted art fraudster John Myatt

The two-year-old said she cut off her fringe because it was getting in her eyes
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Austen Lloyd: Company Secretary

Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...

Citifocus Ltd: German Speaking Client Specialist

£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

Citifocus Ltd: Performance & Risk Oversight

£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game