Energy News

British Gas profits down despite record price hikes

Thursday 26 February, 2009

By becca.talbot@consumerchoices.co.uk

Profits for energy giant British Gas fell 34% in 2008, even though the supplier raised prices twice during the year.

The energy supplier said that the huge rise in the cost of wholesale gas had cut profits to £379million from £571million in 2007, because it only passed on part of rising energy costs to its customers.

Over the last year British Gas (www.britishgas.co.uk), Britain’s largest energy supplier, raised its gas prices by a record 35%.

“In the first half of 2008 we experienced rapidly rising global oil and gas prices, only to see them fall in the second half, at the same time as the credit markets tightened greatly for all of our customers,” said Sam Laidlaw, chief executive at Centrica, which owns British Gas.

He continued: “This backdrop…meant that profits at British Gas Residential were down by 34%, even after we were forced to follow other suppliers and raised retail tariffs twice during the year.”

Figures from watchdog Consumer Focus revealed the typical annual gas bill for a customer paying quarterly by cash or cheque was £568 at the start of 2008, but this rocketed to £882 by January 2009.

Price cuts?

Earlier this month British Gas cut its standard tariff gas prices by 10%, reducing its customers’ average annual gas bill by £84.

The company also launched its new WebSaver 2 tariff last week, an online energy tariff which will save customers switching from its standard tariff £115 a year.

Centrica’s Laidlaw told the BBC that if wholesale prices continued to fall, British Gas may be able to do more to cut domestic bills. “However, it is too early to tell,” he said. “These are tough times and we continue to do more than other suppliers.”

Price cuts from three of Britain’s other “big six” energy companies will come into effect at the end of March.

Scottish & Southern will cut the price of its electricity and gas by 9% and 4% respectively from 30 March, while EDF is cutting its electricity prices by an average of 8.8%, and E.ON electricity bills will drop by 9% cut.

Chris Eagle, commercial manager at EnergyChoices.co.uk said: “British Gas hiked prices twice in 2008, let’s hope if energy prices continue to fall, they will cut prices for a second time this year.”

He continued: “Consumers still don’t feel that price cuts so far this year bear any relation to the massive falls in wholesale prices. Another cut by the energy giants should not be too long coming.”

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