British Gas pressed to cut prices
Filed under: Utilities
The UK's biggest energy supplier, owned by utility giant Centrica, admitted last year's hefty price rises helped its residential arm to an operating profits haul of £345 million in the six months to the end of June.
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Centrica put gas and electricity tariffs up by 18% and 16% respectively last August blaming higher wholesale costs, but this was followed by a drop of 5% in electricity tariffs in January when prices eased.
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It claimed the rise in profits was the result of weak comparative figures with the previous year when it had delayed passing on a price hike, while the cold start to this year's summer had boosted demand.
But consumer groups and unions said it needed to share more of the pain being suffered by hard-pressed consumers by dropping its prices, with some accusing it of profiteering. Unison's head of business and environment Mike Jeram said: "British Gas seems to have side-stepped austerity Britain and passed the pain of the double-dip recession onto their domestic customers."
Earlier this year, Centrica hinted of further price hikes after it warned its energy costs were continuing to rise, with wholesale gas prices 15% higher for next winter and other costs set to add £50 to the cost of supplying the average household this year.
Audrey Gallacher, director of energy at Consumer Focus, called for British Gas to commit that it would not increase prices for the rest of the year in the light of its profit figures. She added: "Hard-pressed consumers will be shocked to see such a big rise in profits when British Gas has been warning of the need for price increases. The disconnection between profits and prices risks deepening consumer distrust over energy bills."
Centrica claims to control just 15% of a customer's bill through its operating costs and profit margins.
Gas revenues jumped 21% in the first half of the year to £3.2 billion while consumption ticked up 3.5%. And electricity consumption was slightly lower at 0.1% while revenues for electricity rose 10%. The stronger performance at British Gas helped the group's underlying earnings rise 14% to £767 million - slightly better than City expectations.
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