Profit spike for British Gas fuels controversy over energy prices

British Gas
Energy
Thursday 18 February 2016 at 8:48am

A profit spike for British Gas has fuelled further controversy over energy prices with critics saying companies are too slow to pass on savings in wholesale prices to customers.

British Gas became one of the last Big Six providers to lower gas prices in the recent round of reductions, with a 5.1% decrease from March 16.

The residential arm of the company saw profits surge by 31% in 2015. The company said it saw a 5% hike in gas usage despite the warmest December on record.

Joel Hills: As British Gas profits soar, are customers getting a fair deal?

Profits were also boosted thanks to lower energy efficiency scheme costs, it added.

Ann Robinson, director of consumer policy at uSwitch.com, said: "Hearing news of rising profits when wholesale energy prices have tumbled will leave many British Gas customers wondering if they're being treated fairly.

"British Gas has cut standard gas prices three times in the last past year, but it should now go further and reduce electricity bills too."

British Gas opposes capped tariffs which would set a maximum price for home energy. Credit: PA

The Competition and Markets Authority (CMA) said British households were overpaying suppliers for their energy by 5%, around £1.2 billion a year, and failing to switch to get the best deals.

British Gas has been among suppliers fiercely opposed to the CMA's proposed "default tariff", which in effect would set a maximum price for home energy.

Centrica chief executive, Iain Conn said 'weather and consumption' was the reason profits went up. Credit: PA

Iain Conn, chief executive of energy supplier group Centrica, insisted the group was passing on reductions in wholesale markets.

The group lost 119,000 customer accounts to reach 14.6 million over last year despite cutting gas prices three times since the start of 2015.

The Big Six suppliers have only reduced gas prices over the past year but the majority of the latest cuts will not take effect until after winter, which has angered consumer groups.

Parent company to British Gas, Centrica, saw adjusted earnings 4% lower at £863 million in 2015 amid announcements that it is cutting a total of 4,000 jobs across the group.