British Gas profits rise during winter chill
31 Jul 2013:
Consumer groups urge British Gas to freeze energy bills for the rest of the year as profits rise to £356m
Consumer groups urge British Gas to freeze energy bills for the rest of the year as profits rise to £356m
British Gas's residential arm increased profits by 3.2% in the first half of this year. Photograph: Lewis Whyld/PA
Consumer groups are urging British Gas to freeze energy bills this winter, after the company's owner Centrica reported a rise in profits following last winter's record-breaking chill and refused to rule out a price hike.
Centrica's chief financial officer Nick Luff would not rule out a price rise as he warned that British Gas is under pressure from environmental levies and volatile prices on the wholesale gas market.
"What I can do is assure you that we will keep our prices as low as we can. It is in our interests to have competitive prices, we want to attract new customers, and if prices do have to go up we will delay that for as long as possible."
Centrica - which hiked prices by 6% last November - reported a 9% increase in profits to £1.58bn for the first six months of the year for its entire business spanning power generation and supply. Profits in the residential arm of British Gas rose 3% to £356m from £345m, as the company reported that gas consumption was 13% higher per customer during the cold weather.
British Gas prompted widespread criticism with last year's price increase, which added £80 a year to the average dual-fuel customer's bill. The company, which serves 10m households, promised in May it would use its profits to keep prices down, but has refused to put a date on the duration of this price pledge.
Consumer groups urged British Gas to freeze energy bills for the rest of the year. Tom Lyon at uSwitch.com, said: "The fact that British Gas has absorbed increasing costs so far this year will be of cold comfort to consumers who may be fearing the worst – especially with rumours of price rises. Profits are up from last year, so we would urge British Gas to help quell customer's fears and go one step further from its May pledge and commit to a price freeze for the rest of the year."
"People are already starting to worry about next winter and the cost of their energy bills and high energy prices have a big impact on consumers. Last winter, almost seven in ten (69%) households went without heating at some point to keep their energy costs down."
Centrica blamed "volatile" prices on the wholesale gas market and "environmental costs" for adding to price pressures on the business.
Wholesale gas prices accounted for 48% (£568) of the average annual gas and electricity bill of £1188 for Centrica's customers in 2012.
Prices in the wholesale gas market were 10% higher than this time last year, said energy trader Gary Hornby at Inenco. "If there is another cold winter and we have another supply situation that we did last time there is a good chance that prices will unfortunately go up," he said. "If we have a mild winter it could go the other way."
Richard Hall, head of energy regulation at Consumer Futures, warned that the big energy companies were not giving consumers the full story about their costs. Large energy suppliers had a tendency to "cherry-pick" dates to make the case that high wholesale gas prices were pushing up prices. "It doesn't appear there is so much pressure on the wholesale market that it can justifiably be used as threat of justifying price rises." Although gas prices hit record highs in March, these on-the-day spikes were dampened out by later price falls, he added.
Centrica's profit report comes after an influential committee of MPs said it was not surprising that customers mistrusted energy companies because they had failed to be transparent about the reasons for energy price rises, in an energy market that was not as competitive as it could be.
Luff dismissed the charge of cherry-picking data: "Despite what you hear about the industry we could not be more transparent...If by some way gas prices were running at half the price we were saying we would suddenly make a lot more profit."
COPY http://www.theguardian.com/uk-news
Centrica's chief financial officer Nick Luff would not rule out a price rise as he warned that British Gas is under pressure from environmental levies and volatile prices on the wholesale gas market.
"What I can do is assure you that we will keep our prices as low as we can. It is in our interests to have competitive prices, we want to attract new customers, and if prices do have to go up we will delay that for as long as possible."
Centrica - which hiked prices by 6% last November - reported a 9% increase in profits to £1.58bn for the first six months of the year for its entire business spanning power generation and supply. Profits in the residential arm of British Gas rose 3% to £356m from £345m, as the company reported that gas consumption was 13% higher per customer during the cold weather.
British Gas prompted widespread criticism with last year's price increase, which added £80 a year to the average dual-fuel customer's bill. The company, which serves 10m households, promised in May it would use its profits to keep prices down, but has refused to put a date on the duration of this price pledge.
Consumer groups urged British Gas to freeze energy bills for the rest of the year. Tom Lyon at uSwitch.com, said: "The fact that British Gas has absorbed increasing costs so far this year will be of cold comfort to consumers who may be fearing the worst – especially with rumours of price rises. Profits are up from last year, so we would urge British Gas to help quell customer's fears and go one step further from its May pledge and commit to a price freeze for the rest of the year."
"People are already starting to worry about next winter and the cost of their energy bills and high energy prices have a big impact on consumers. Last winter, almost seven in ten (69%) households went without heating at some point to keep their energy costs down."
Centrica blamed "volatile" prices on the wholesale gas market and "environmental costs" for adding to price pressures on the business.
Wholesale gas prices accounted for 48% (£568) of the average annual gas and electricity bill of £1188 for Centrica's customers in 2012.
Prices in the wholesale gas market were 10% higher than this time last year, said energy trader Gary Hornby at Inenco. "If there is another cold winter and we have another supply situation that we did last time there is a good chance that prices will unfortunately go up," he said. "If we have a mild winter it could go the other way."
Richard Hall, head of energy regulation at Consumer Futures, warned that the big energy companies were not giving consumers the full story about their costs. Large energy suppliers had a tendency to "cherry-pick" dates to make the case that high wholesale gas prices were pushing up prices. "It doesn't appear there is so much pressure on the wholesale market that it can justifiably be used as threat of justifying price rises." Although gas prices hit record highs in March, these on-the-day spikes were dampened out by later price falls, he added.
Centrica's profit report comes after an influential committee of MPs said it was not surprising that customers mistrusted energy companies because they had failed to be transparent about the reasons for energy price rises, in an energy market that was not as competitive as it could be.
Luff dismissed the charge of cherry-picking data: "Despite what you hear about the industry we could not be more transparent...If by some way gas prices were running at half the price we were saying we would suddenly make a lot more profit."
COPY http://www.theguardian.com/uk-news
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