News In Depth
Anger over British Gas profits rise
The owner of British Gas has run the gauntlet of public anger as it revealed a £606 million profit haul at its residential arm months after hiking customer tariffs.
Centrica said an 11% rise in profits at British Gas residential came after last year's colder-than-normal weather saw gas use leap 12% and in spite of a 1% fall in customer accounts to 15.7 million in 2012.
The results are likely to raise questions over the fairness of energy bill increases after British Gas raised tariffs by 6% for around 8.4 million households at the end of last year.
Group adjusted operating profits rose 14% to £2.7 billion, but Centrica said it paid more than £1 billion in tax and invested £2.7 billion in 2012.
Directors from the company appeared on television to defend the results.
Chris Jansen, managing director of services and commercial at Centrica, said a colder winter last year contributed to the rise in profits.
He told Daybreak: "I completely understand our profits announced today will create a reaction with customers.
"I think it's important to remember that in 2011 it was a very, very mild winter ... so the country used a lot less gas, and actually our profits in 2011 were 20% down on 2010."
Asked whether customers would face further price increases, Mr Jansen replied: "It's impossible for me to say that, that's like looking at a crystal ball.
"The general trend for energy prices are prices are increasing. All we say to customers is let's do what we can to control energy bills.
"Prices might be going up but bills don't need to if we control our energy use."
Ian Peters, managing director of residential energy for British Gas, said: "If I look into the future we have no plans to put prices up even higher, the gas prices are relatively calm."
Asked on BBC Breakfast how long into the future - and if the firm was committing to not putting prices up - he said: "I can't do that because the gas market is volatile.
"But right now, as I say, it is very early in the year, we work in a very competitive market and it is not in our interest or our customers' to put prices up. So we will do everything we can not to do that.
"What I want to say is that we will move heaven and earth to keep our customers' bills down. We have the lowest bills in the industry."
Centrica said it was too early to say if customers should be braced for further price hikes this year, but added that there were "upward pressures" in the market after a 13% jump in wholesale gas prices winter for 2012/13.
Chief executive Sam Laidlaw insisted the group needed to make a "fair and reasonable return so that we can continue to make our contribution to society and to invest".
Centrica stressed that British Gas contributes a fifth of total group profits, with 2012 results also largely driven by a rise of 20% in profits at its its upstream gas and oil exploration business to £1.2 billion.
The group said its move to raise prices saw customer numbers fall 1.5% in the second half of 2012 to 25 million, while it added that difficult economic conditions had made it hard to attract new customers and resulted in a 10% fall in boiler installations in 2012 as customers reined in spending.
Profits at British Gas Business fell 9% to £175 million as firms were also hit amid wider economic pressures.
As part of a strategic overhaul, Centrica also revealed plans to expand further in North America and confirmed that British Gas boss Phil Bentley will step down after six years in the top job on June 30 as part of a management shake-up.
US retail boss Chris Weston will take on responsibility for all so-called downstream operations, including British Gas Residential in the UK, while Mark Hanafin will lead the international upstream business.
It said low gas prices "offer a good opportunity for growth" in America, adding that it was on track to double profitability in the US since 2009.
Shadow energy and climate change secretary Caroline Flint said it was time for a "complete overhaul of our energy market".
"People will not understand why, just a few months ago, British Gas claimed they had no option but to put up their prices when now it looks like they're making huge profits on the back of spiralling bills for hard-pressed consumers," she added.
Consumer Focus called for greater transparency between profits and prices earlier this month after utility giant EDF revealed a £1.7 billion earnings haul just two months after raising bills for 3.7 million British households.
what do you think?
DAYLIGHT ROBBERY BUT THE GOVERNMENT AND REGULATORS WONT DO ANYTHING ABOUT IT BECAUSE IT WOULD MEAN LOWER REVENUES TO LINE THEIR OWN POCKETS!! SOD THE MIDDLE TO LOWER CLASS PEOPLE WHO ARE STRUGGLING TO MAKE ENDS MEET AS IT IS
How about capping our rises like the French? Or is our rise to subsidise them?
Well, there's someone who deserves one hundred lashes.
lotto gas electricity fuel drink all make this country billions and thats why the GOV keep put the prices up RIP OF BRITAIN
Wonder how much Mr.Taxman will get, er sorry Mr.Taxman but we NEED all this profit to invest in a new gas pipe.GREEDY Bs.
I hate the prices we have to pay for our utilities as much as anybody but i heard on 5 Live today that Centrica's profits for last year actually worked out at £50.00 profit ,per year ,per customer,or roughly £1.00 a week ... If that is true then its actrually not that much of a profit is it? I mean,even if they only covered their costs to give it us as cheap as possible then our bill would only be reduced by £50.00 per year. I just wish we had a Government that would bite the bullet, stop all overseas aid for the next ten years and use that money to build our new Nuclear power stations,but alas, all we get is stupid,totally inefficient wind turbines. Marvellous.
They say there profit was because of a bad winter? What a load of bull..... Where i live it was acually quite a mild winter with mabye 4 days of snow if you could even call it that and my gas use is far lower than last winters yet the bill works out at far far more so much more infact that for the first time dispite paying my weekly amount i am acualy in debt to them for the first time ever. This is nothing more than a greedy company intentionally rising its prices at a time of need to pull more profit from there customers so they can line there own pockets and give them self a pat on there back and buy that Ferrari they want
if turnover / gas consumption goes up profit will go up
Well Michael if you bother to check your facts you would know that year to date UK gas consumption is acualy a little less than last years gas consumption so your staitment is wrong when it comes to this case. Go visit the British gas business site for your self. If you cant be bothered to go look that's up to you but answer me this if the UK wide gas consumption is a little less than last year how can they be making a greater profit than last year? Oh yeh my bad never mind I remmber now they put the price up ......
Could you bother to look up what happened to the retail price of gas for the same period
government will not do anything, these people do not live with us in the real world, they are so protected by the massive amounts of their own money, They are not normal residents of our country
No point they do not make excessive profits based on turnover
my rent has also risen by £6 today! (Hammersmith and Fulham Council)
I bet you are not paying the full commercial rent for your property
I will take the -1 as a no then