British Gas profits dip despite increased bills for customers

Feb 20, 2014

Warmer weather and higher wholesale energy costs believed to have had impact on profits

AFP/Getty Images

PROFITS have fallen at the UK's largest household energy supplier, British Gas, despite rising gas and electricity bills for customers.

The energy giant saw profits from its household operation fall six per cent from £606m in 2012 to £571m in 2013, despite raising prices by 9.2 per cent in November. Following the government's changes to renewable energy funding, it subsequently reduced the rise to 3.2 per cent.

The company is said to be looking at new ways to win back customers after losing 362,000 accounts – two per cent of its total – last year and a further 100,000 customers so far in 2014.

The milder weather also had an impact on profits, with customers turning down their heating, reports the Daily Telegraph.

Centrica, which owns British Gas, posted a dip in profits, which were £2.7bn, down from £2.74bn the year before. Centrica and British Gas revenues actually rose in 2013, but the group puts the profit slip down to higher wholesale gas and electricity prices.

Soaring energy costs have become a big political issue in Britain since Labour leader Ed Miliband announced he would freeze consumer bills for 20 months if he wins the next national election.

Centrica shares have lost a fifth of their value since the proposal. Earlier this month, British Gas's prices and profits were questioned by Energy Minister Ed Davey, who suggested the firm might have to be broken up.

Sam Laidlaw, Centrica chief executive, said that "the prospect of political intervention and a wide range of potential policy initiatives has damaged investor confidence".

He insisted the group made "good strategic progress" in 2013, but warned that this year would "remain challenging, with margin pressures and unusual weather patterns on both sides of the Atlantic, rising unit costs in the North Sea and weak economics for gas storage and gas-fired power generation".

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My heart bleeds! And could it be that users are cutting down on consumption to avoid exorbitant prices.