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Last Updated: Thursday, 23 February 2006, 08:07 GMT
Profits up at British Gas owner
British Gas van
British Gas actually made a loss in the last six months
British Gas owner Centrica has announced an 11% rise in operating profit to 1.5bn for 2005.

However, Centrica said the profit rise came largely from its gas production and storage business.

Profits at its British Gas business fell 63% to 90m after it delayed passing on the full impact of higher wholesale gas prices to customers.

Last week British Gas raised prices by 22%, blaming a 70% rise in wholesale gas prices over the past 12 months.

The British Gas business reported a loss of 75m in the second half of the year.

Centrica's gas production operations saw annual operating profits rise 31% to 1bn, and its gas storage business saw profits more than double to 154m.

Price protection

James Ball, president of Gas Strategies Consulting, told the BBC that, like other energy suppliers, British Gas had to pass on the increase in wholesale prices.

We hope to avoid any need for further price rises this year

"Not just Centrica but all of the gas retailers in this country have been charging their customers way less than they have been buying the gas for all this winter.

"So what we are really getting is not next year's prices, but last year's prices reflected in the retail price now."

The good news for customers was that Centrica said improved wholesale gas supplies could protect consumers from further price rises in 2006.

"While there can be no guarantees in such a volatile wholesale market we hope to avoid any need for further price rises this year," it said.

Centrica's figures also showed that British Gas had a net loss of more than 600,000 customers last year, with its market share falling from 57% to 54% as customers switched to other suppliers.

Centrica's shares fell 3.5% to 285.75 pence as investors worried about the sharp fall in retail gas profits.

Customers react to the gas price increases

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