Winter freeze boosts British Gas profits
Households cranking up the heating in the freezing winter weather helped British Gas rack up hefty profits in the first quarter of 2010, parent Centrica said today.
British Gas expects a "strong performance" this year after the cold weather prompted 7% higher gas usage than in 2009, with electricity consumption also up 2%.
Profits at the residential business will be "heavily weighted towards the first half" of this year, the company added.
Despite the profit boost, British Gas said average bills for its 15.9 million customers in the first quarter of 2010 were lower than a year earlier due to its 7% gas price cut in February.
The prediction of more strong profits at British Gas comes after the UK's biggest energy supplier delivered record operating profits of £595 million last year - up from £376 million in 2008.
British Gas has gained more than 200,000 new residential customers so far this year, as well as 100,000 servicing contracts.
The group installed 20% more central heating systems than a year earlier - thanks to cheaper pricing and the Government's boiler scrappage scheme - but said costs rose due to the higher number of boiler breakdowns in the cold snap.
But the weather also boosted profits at its business arm due to higher than expected demand for energy as well as strong renewals and an improved operating performance.
The healthy profits from the group's energy supply arm were however offset by much tougher conditions for Centrica's upstream production business.
While gas and oil production was 59% ahead of the previous year - helped by acquisitions - wholesale gas prices are still low due to a market glut and weak demand.
Centrica expects the "weak commodity price environment" to continue to impact the production business this year, despite "strong returns" from its supply business.
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