As customers feel the pinch, energy firms' profits surge

British Gas expected to make 30% more than last year after keeping tariffs high despite plummeting costs

Britain's two domestically-owned energy giants, British Gas and Scottish & Southern, are expected to report significantly higher profits to the City in coming months as they reap the benefits of high retail prices.

Next month Scottish & Southern will announce half year profits much greater than the same period last year, when it made £302m. In February, profits at Centrica's British Gas business are expected to rise by at least 32 per cent from last year's £379m to £500m.

Both companies insisted yesterday that the higher profits followed a poor year last year when they kept back some of a spectacular surge in wholesale prices from customers. However the profits rises are likely to prompt fresh demands for price cuts.

The Independent launched a campaign this week against the Great Energy Rip-Off, calling for lower prices and regulatory action against firms that withhold cuts in wholesale prices.

Although the regulator Ofgem last year cleared suppliers of artificially inflating retail prices, a study by the publicly funded watchdog Consumer Focus this year suggested they were overcharging average users by £96 a year.

David Hunter, an expert at Britain's biggest independent energy analyst, estimated bills were at least 10 per cent too high, or £120 a year.

By buying cheap wholesale energy, two new companies First:Utility and OVO Energy have entered the market in the past month with cut-price internet deals of £954 and £978 respectively. Some 1.3 million customers are on relatively cheap internet tariffs with the Big Six costing between £961 and £1,009. However 95 per cent of homes are on a Big Six direct debt, standard or pre-payment tariff averaging between £1,140 and £1,240.

Four of Britain's energy suppliers – Npower, E.ON, EDF Energy and ScottishPower – are owned by foreign utility giants, who have been accused of treating the UK like a "Treasure Island".

With the exception of EDF Energy, direct debit tariffs with the British-owned companies Scottish & Southern and British Gas, are cheaper than their foreign-owned competitors.

However because of the difficulty of tracking profits from Big Six suppliers within Continental empires, the UK-owned firms give the best clue about the profitability of the UK energy market, even though their margins may be lower.

According to one forecast, Scottish & Southern's interim profits will be £600m, double last year's figure.

Last night S&S declined to comment in detail because it has entered its closed period, but it confirmed its numbers would be "significantly higher".

Referring to its previous statements to the Stock Exchange, spokesman Justyn Smith said: "As stated on 23 July and again on 28 September, SSE's adjusted profit before tax for the six months to 30 September 2009 is expected to be significantly higher than in the same six months in 2008, when it was exceptionally low.

"It is very misleading to suggest that all profit comes from the energy supply business," he said, adding that 38 per cent of profits were unrelated to household supply.

Stockbrokers are forecasting British Gas profits of £500m, the second highest profit the firm would have made in the last five years. In the past five years, its results have ranged from £90m to £571m. In a statement to the Stock Exchange in July, Centrica revealed that in the first half of the year operating profits at British Gas jumped 56 per cent to £476m as a result of low wholesale prices and high winter demand.

Mish Tullar, Centrica's group media relations director, dismissed any suggestion that British Gas was making excessive profits. A forecast profit margin of 6.5 per cent, he said, was the same as Tesco, and below the 11 per cent for oil giant BP and 15.2 per cent for Sky.

Price comparison websites are urging households to switch to a better deal. Internet tariffs, where bills are emailed rather than posted, are cheapest, averaging £990 a year.

Scott Byrom, utilities manager at moneysupermarket.com, said: "It is crucial that consumers find the best energy tariff for their region and usage now to safeguard themselves against receiving expensive winter bills.

"If still languishing on a standard tariff, by moving to an online deal they could save £240 a year."



Save up to £380 by switching your energy provider with Independent Compare

News
The slice of Prince Charles and Princess Diana's wedding cake and the original box from 29 July 1981
newsPiece of Charles and Diana's wedding cake sold at auction in US
News
James Argent from Towie is missing, police say
newsTV star had been reported missing
Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
News
Winchester College Football (universally known as Winkies) is designed to make athletic skill all but irrelevant
Life...arcane public school games explained
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
News
i100(and it's got nothing to do with the Great British Bake Off)
News
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
News
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
News
news It's not just the world that's a mess at the moment...
Sport
footballPremiership preview: All the talking points ahead of this weekend's matches
News
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
people
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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 General

Financial Technical Consultant (C++, C#, Finance, MSc, PhD)

£50000 per annum: Harrington Starr: Financial Technical Consultant (C++, C#, F...

Year 3 Teacher

Negotiable: Randstad Education Plymouth: Year 3 Teacher Required We are curr...

Year 5 Teacher

Negotiable: Randstad Education Plymouth: Year 5 Primary Teaching positionRands...

C# Algo-Developer (BDD/TDD, ASP.NET, JavaScript, RX)

£45000 - £69999 per annum + Benefits + Bonus: Harrington Starr: C# Algo-Develo...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone