Belfast Telegraph

Sunday 21 September 2014

Consumer anger at Centrica profits

Centrica's half-year profits included 270 million pounds for residential arm British Gas

Utility giant Centrica has come under fire from consumer groups after it unveiled £1.3 billion in half-year profits - including £270 million for its residential arm British Gas - just weeks after announcing a price hike.

Centrica said adjusted operating profits in the six months to June 30 at British Gas fell by 54% compared to the same period last year, as it battled with a 30% increase in wholesale gas prices and lower consumption.

But independent lobby group Consumer Focus said customers do not care which parts of the business are making money - they are just worried about paying the bills.

British Gas, the UK's biggest energy supplier, plans to lift gas and electricity prices by an average of 18% and 16% respectively from August 18 to counteract soaring costs.

Centrica, which posted a 19% decline in adjusted operating profits from £1.6 billion in the same period last year, said the hikes are essential if British Gas is to make a profit this year.

But its upstream gas exploration and production arm - which benefits from higher wholesale prices and includes assets in the North Sea and Trinidad and Tobago - posted a 14% increase in profits to £414 million.

Audrey Gallacher, director of energy at Consumer Focus, said Centrica "seems to win whether wholesale costs are high or low".

She said: "Retail profit 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. Given Centrica profits remain strong, consumers are bound to question whether recent large price hikes were necessary."

Some nine million customers will be hit when British Gas raises the average dual fuel bill by £190 a year to £1,219, pushing the average monthly bill to £101.58p.

Richard Lloyd, executive director of Which?, said: "Many people are struggling with rising energy costs and when they see suppliers announcing these profits they're bound to question whether we're paying a fair price for our energy."

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