• Text size      
  • Send this article to a friend
  • Print this article

British Gas on track to make another £50 profit from every home it supplies

British Gas owner Centrica is set to reignite the debate over rising gas and electricity bills when it reveals annual results today.

The group is unlikely to deflect consumer anger as it is set to disclose that its UK retail arm made a profit of £592 million last year.

While down marginally from £606 million in 2012, it still equates to around £50 for each of the 12 million residential homes it supplies.

Centrica hiked prices in the autumn to offset losses at the residential business after the division slipped into the red for a number of months.

The group increased tariffs by 9.2% on average - 8.4% for gas and 10.4% on electricity - from November as part of a round of painful winter bill rises across the industry.

But a shake-up of the Government's so-called green levies on bills has seen providers scale back rises, with British Gas passing on a 3.2% reduction to customers from January.

The group's shares have plunged by more than a fifth since last autumn as it faces renewed political pressure over the rising cost of energy and the threat of being broken up.

It was left reeling after Labour leader Ed Miliband's pledge to freeze tariffs if the party wins power, 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.

A shock profit warning last November compounded its share price woes after Centrica said overall group earnings were set to remain largely flat on the £2.7 billion reported in 2013 after being hit by challenging conditions in its business supply arm across the UK and United States.

The market had expected a rise in overall group earnings of 3% to 4% but has since trimmed expectations to an increase of 2% to £2.8 billion.

Mr Davey's most recent intervention highlighted the group's dominance in the gas supply market, citing figures that showed its margins were several times higher than they were for electricity, and claiming consumers could save £40 a year if they were brought in line.

Centrica is meanwhile undergoing a major boardroom upheaval, with chief executive Sam Laidlaw preparing to call time on nearly eight years at the group.

The firm has started lining up potential candidates to succeed him at the helm, according to reports, with BP refining chief Iain Conn said to have been approached and British Gas boss Chris Weston, who previously ran the group's US arm, cited as an internal front-runner.

The group remained tight-lipped on any succession plans, except to say there was no formal process under way and that headhunters have not been appointed.

Centrica has only just seen chairman Sir Roger Carr depart after nine years in the job, replaced last month by Rick Haythornthwaite, while financial director Nick Luff also announced in January that he was leaving, with a successor yet to be appointed.

Contextual targeting label: 
Business

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis.
If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

214186