Gas firm slammed over profits

BRITISH Gas customers were urged to give the company “a bloody nose” yesterday as parent company Centrica banked record profits - just days after increasing household energy bills by 22%.

BRITISH Gas customers were urged to give the company “a bloody nose” yesterday as parent company Centrica banked record profits - just days after increasing household energy bills by 22%.

Consumer group Energywatch advised customers to move to a cheaper supplier after Centrica posted an 11% increase in operating profits to £1.51 billion for 2005.

The record results came just a week after the company inflicted its 17 million customers with a fourth inflation-busting hike in gas and electricity bills in two years.

Centrica insisted that the increases were not enough to cover soaring wholesale gas prices which left British Gas with losses of £75 million in the second half of 2005, reducing its annual profit by 63% compared with 2004 from £242 million in 2004 to £90 million.

Instead, Centrica said, the bulk of its profits came from its gas production and storage operations - but with these businesses benefiting from the same pressures which drove up the wholesale prices paid by British Gas this cut no ice with the group's critics.

Energywatch chief executive Allan Asher said: “As a consumer I feel aggrieved when one week I hear of a 22% price rise and the next I hear of high profits.

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“Its profits may not be coming from its domestic business, but today's announcement from Britain's most expensive supplier can only jar with consumers who may not be able to heat their homes properly. Over the past week millions of consumers will have sat down, trying to figure out how to cope with £1,000 energy bills.

“If they deserted British Gas in droves then not only would millions save money on energy bills but they would give British Gas a bloody nose by sending out the strongest possible message that consumers will not tolerate the never-ending cycle of high prices that we are now seeing.”

Help the Aged added that the higher bills, combined with increased water rates and council tax, meant that “many older people will be struggling now more than ever” against fuel poverty, defined as spending more than 10% of their income on heating and power.

Centrica became the fifth supplier to raise prices or announce new tariffs in 2006 when last week it said bills will go up 22% on March 1 following a 63% rise in the cost of wholesale gas.

However, chairman Sir Roy Gardner said yesterday: “British Gas's residential energy business lost £75 million in the second half of 2005 because we didn't pass through all of the wholesale price impact to customers.

“Despite the latest price rise, we are still shouldering some of the burden of high wholesale prices in 2006. British Gas as a standalone business would not survive.”

Centrica will hand out rebates of £90 to more than 300,000 of its most vulnerable customers this year, but with the cost of wholesale gas up again this year, Sir Roy refused to rule out putting up bills again this year.

“We hope we do not have to make any more price rises this year,” he said. “We pitched the latest rises at a level where we think we can get through the year without a further increase, but you never know what will happen next winter.”

The improvement in Centrica's group operating profits - from £1.36 billion in 2004 - was achieved on turnover up 18% at £13.4 billion.

Dougie Rooney, national officer at trade union Amicus, said yesterday: “These profits can only be described as excessive but are hardly surprising, given the huge energy price rises and the victims are industry and vulnerable consumers such as the elderly and low paid.

“The Government really needs to intervene to exercise proper control over these powerful energy providers who are manipulating the markets and holding the country to ransom.”