November 24 2014 Latest news:
Thursday, February 20, 2014
British Gas owner Centrica today revealed a £571million profit haul from its residential energy arm for 2013, months after raising its gas and electricity prices.
It marks a 6% fall compared with the previous year’s figure of £606m but is unlikely to calm public anger over rising energy costs.
Centrica said British Gas shed 2% of residential customer accounts in 2013 to 15.3million as households switched to other suppliers following its move to increase tariffs by 9.2% on average from November as part of a round of painful winter bill rises across the industry.
It added that another 100,000 had quit the group so far this year, but customer switching was now “stabilising” after it scaled back its price rise by 3.2% following a shake-up of the Government’s so-called green levies on bills.
Chief executive Sam Laidlaw said that public and investor trust in the energy industry had been “damaged” by the threat of price controls and political intervention.
He attacked Labour leader Ed Miliband’s pledge to freeze tariffs if the party wins power, saying it was “not a credible solution”.
He said: “We firmly believe that any form of price control in a competitive market is not the answer and is not in the best interests of customers, and this has been clearly demonstrated by experience in other markets.
“Such proposals create both short-term uncertainty for all energy suppliers and longer-term additional costs for customers,” he added.
The group’s shares have plunged by more than a fifth since autumn following Labour’s price freeze pledge, with the stock driven down further after Energy Secretary Ed Davey recently called for a full-scale investigation into the energy market that could see British Gas broken up.
In a letter, Mr Davey urged competition authorities to “think radically” as they consider whether to launch a probe.
Across the Centrica group, operating profits were 2% lower at £2.7billion last year.
Higher wholesale prices and unseasonally warm weather at the end of last year saw British Gas suffer an 18% slump in operating profit in the final six months of 2013, which offset a better start to the year.
Centrica said it “can’t make promises” over prices for the year ahead, but added it would look to keep prices “as low as we can for as long as we can”.
It said this year’s milder winter weather was likely to see bills come down by 9% or 10% as households have not had to crank up the heating.
British Gas said it was “confident we can go back to customer growth” after the exodus since November, helped by the recent launch of new fixed price deals.
It revealed profit margins for its gas business stood at 8.9% in 2013, far higher than the 0.8% electricity margin.