British Gas owner Centrica attacked over £1.3bn profits

Centrica seems to benefit whether energy costs are high or low, says Consumer Focus The row over household energy prices was ignited again on Thursdaywhen Centrica, the parent group of British Gas, unveiled operating profits of £1.3bn in the first half of the year. These “adjusted” profits, achieved on revenues of £11.5bn, were 19% lower than 2010 – but they were enough for Centrica to unveil a 12% increase in the dividend payment for shareholders, to 4.29p per share. The company said that the residential arm of British Gas recorded a 54% slump in operating profits and argued that business would have been driven into loss in the second half of the year without the recently announced 18% increase in gas prices and 16% rise in electricity bills to some of the company’s 9 million UK consumers. Nick Luff, Centrica’s finance director, said that domestic energy prices were largely driven up by rising wholesale costs, while the group needed profits to invest in the future. He said: “We made operating profits of £1.3bn but we also invested £1.3bn and if we are not going to invest in future oil and gas projects then the country will only see even higher energy prices.” Luff added that British Gas’s profit margin fell to between 6% and 7% in the first six months of 2011, down from around 8% a year ago. It is expected to remain between 6% and 7% for the next six months, as the higher prices kick in. But Audrey Gallacher, director of energy at Consumer Focus, said energy companies such as British Gas always seemed to benefit when the British householder did not. “Centrica seem to win whether wholesale costs are high or low. Retail profits margins may have been reduced by recent increases in wholesale prices – but as they are also major gas and electricity wholesalers, they can still make healthy profits at the other end.” “Consumers will be more worried by their increasing bills than which part of an energy company makes the most money. Given that Centrica profits remain strong, consumers are bound to question whether recent large price hikes were necessary,” said Gallacher. The energy regulator, Ofgem, is currently undertaking a review into whether the dominance by the big six energy providers, including British Gas, EDF and E.ON, distorts the market and allows for profiteering . Luff denied this was the case, adding: “We have had 15 different reviews in the last 10 years and none have concluded Britain was anything other than a competitive market.” Centrica Utilities Gas Inflation Household bills Terry Macalister guardian.co.uk

Posted by on July 28, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.