Financial News

  • 8 May 2014, 20:58

British Gas: Mild Winter Squeezes Profits

The owner of British Gas has confirmed it does not plan to raise household bills this year, despite the mild winter hitting profits.

Centrica reduced its 2014 earnings outlook in a trading update, saying the average British Gas residential energy bill was around 10% lower this winter than last.

It said average consumption of gas and electricity fell 25% and 10% respectively in the first four months of the year.

British Gas shares opened 4% lower as it revealed the squeeze in profitability - made worse by the loss of 180,000 residential accounts in the year to date.

Centrica also said that margins would be around 4% - down from the previous year's figure of 4.5% - and that would likely impact investment.

The so-called Big Six energy suppliers have previously warned about dangers to energy infrastructure investment from political and public pressure to keep down bills.

Major firms reduced bill increases when the Government agreed to take green levies out of household bills but company profits remain under tight scrutiny.

On the prospect of rising bills, Centrica said expected upward pressure next year from increasing network charges and higher costs associated with renewable energy.

The statement said: "Assuming that energy market conditions remain benign, and recognising the competitive conditions in the UK energy supply market, we do not currently expect to change our residential energy prices during 2014."

It pointed to increased competition from smaller providers as some offer tariff packages below £1,000 annually.

One rival, SSE, has pledged to freeze household gas and electricity prices until January 2016.

Gas and electricity charges remain under the microscope of regulators.

The new Competition and Markets Authority has been asked to consider "once and for all" whether there are barriers to competition in the industry.

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