Energy customers face higher bills
Consumers are facing another round of energy price rises after the UK's biggest supplier revealed a further squeeze on its margins.
British Gas owner Centrica said the wholesale price of gas and power for delivery next winter is around 25% higher than last year, but the price paid by households has yet to reflect this higher price.
The company, which has around 16 million energy accounts, said its results for 2011 were likely to be "materially influenced" by the recovery of higher wholesale prices and other costs.
It said: "Market conditions for our residential energy supply business are significantly more challenging than in 2010."
A Centrica spokesman said the company had yet to take a decision about whether to increase tariffs. The company pushed up bills by 7% after the coldest winter in 100 years but subsequently posted a 24% surge in operating profits to £742 million in 2010.
Centrica said increased profits from its exploration and production business were expected to more than offset lower profits from consumer-facing operations.
But it added that a decision by Chancellor George Osborne to increase the supplementary tax on oil and gas production from 20% to 32% in this year's Budget would offset the benefit of higher commodity prices.
The company has already warned the tax hike could mean that one of three fields in Morecambe Bay may not reopen following maintenance. Shares were 3% lower on Monday morning.
Centrica expects its tax rate for this year to be around 45%, equivalent to an increase of £300 million on last year. This is despite a lower rate of corporation tax.
Centrica said warmer weather this year, particularly last month, meant average residential gas consumption in the first four months of the year was 19% lower than the same period a year earlier, with electricity usage down 4%. The number of residential energy accounts has grown in recent weeks to nearly 16 million accounts, slightly above the level at the end of 2010.