Financial News

  • 21 February 2014, 14:31

British Gas Blackout Warning As Profit Drops

Energy group Centrica has announced a drop in profit for its British Gas residential arm, as its chairman warned political bickering increases the chance of "the lights going out".

His warning comes as the managing director of British Gas told Sky News the company is not profiteering from its UK customers.

"The market is working and British Gas is not the most expensive supplier," Chris Weston told Business Presenter Joel Hills.

"It is one of the most competitive markets in the world and it has provided some of the lowest prices for energy in Europe."

Centrica revealed a pre-tax profit of 571m last year, down 6% on the 2012 figure, despite losing 2% (362,000) of its accounts.

It is the largest of the so-called Big Six providers and currently has 15.3 million account holders - some are gas, others electricity or dual fuel, averaging a profit of 38.70 from each account.

It described 2013 as a year of "difficult market conditions" as the company has come under intense political and consumer pressure over its dominant position.

Earlier, new Centrica chairman Rick Haythornthwaite said of the political sniping: "I think its immensely damaging not just for Centrica but for the nation.

"I think the reputation of Britain as a place in which to invest is under threat and the time to correct that is now not after the 2015 election, by which time the possibility of the lights going out in Britain will be looming much larger.

Centrica said total operating profit for all divisions reached 2.695bn, down 2% on the 2012 figure.

Criticism has been levelled at energy firms for their "upstream" energy supply divisions' climbing profits, and thus energy costs being passed onto consumers.

Centrica's energy division saw profit up 6% last year to 1.3bn, which is 153% higher than five years ago.

The firm said it was trying to "improve understanding and rebuild trust" with customers.

Sky News City Editor Mark Kleinman revealed the fightback plan would include an overhaul of prices and packages.

Centrica and other suppliers have hiked prices in recent months. In November, British Gas tariffs went up by 9.2% on average.

Customers got a respite in January with a 3.2% price cut following changes to Government green energy levies, but political pressure on the firm is still simmering away.

Tough talking by Labour leader Ed Miliband and Energy Secretary Ed Davey have forced Centrica's shares to plunge by a fifth since the autumn.

Mr Miliband said last year that he would freeze energy prices for 20 months if the party won the General Election.

Mr Davey added another body blow this month, urging industry watchdog Ofgem to "think radically" about whether to launch a probe that could see the company broken up.

The Energy Secretary believes every household could save 40 a year if profit margins for gas were to come down to a similar level to those in the electricity market.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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