Second power firm declares huge profits while raising bills

Thursday 15 November 2012

British Gas owner Centrica courted more anger over its planned price hikes today by revealing it is set to make profits of £1.4 billion this year.

Centrica will increase its bills by 6% on Friday despite being on course to make a £1.4billion profit this year

The company, which will increase its energy bills by 6% tomorrow, said it was on track to meet the City's expectations for year-on-year growth in earnings.

Analysts also predict around £575 million of pre-tax profit from its British Gas residential arm after gas consumption for the first 10 months of 2012 was 9% higher because of colder than normal weather. British Gas also trades as Scottish Gas.

The group, which makes most of its profit from upstream gas and oil exploration, provides gas and electricity to almost 16 million households. Its trading update comes after rival SSE yesterday reported a 38% jump in half-year profits to nearly £400 million. Centrica has blamed rising energy bills on the costs of carbon reduction targets and upgrading the UK's gas and electricity grids. It also said it experienced a 13% rise in wholesale gas prices for this winter. The anticipated 6% profits improvement in residential energy supply has been driven by stronger trading over the first half of the year, with the figure expected to be lower for the second half of the period. According to today's Sun newspaper, E.ON is also planning to announce bill hikes of 11% from early next year. It is the only "big six" firm not to have announced price rises in recent weeks, having promised to keep prices unchanged this year. In today's trading update, Centrica said competition in its division which supplies small and medium-sized businesses had cost it 43,000 customers since June. The weak UK economy accounted for a 16% drop in the number of central heating installations in the first 10 months of the year. In its UK upstream business, Centrica said it expected to increase production by nearly 20% this year as it brought the first gas to shore on North Sea projects including Seven Seas and Ensign. Next year Centrica said it expected to increase UK production by up to 15%. Centrica said its North America residential business continued to perform well this year despite a warmer than average winter in the first half of the year. But continued low natural gas prices in the US were making it challenging for the upstream and wholesale business on the continent.

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Second power firm declares huge profits while raising bills

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