Page last updated at 10:20 GMT, Thursday, 25 February 2010

British Gas profits jump by 58% to record high

Sam Laidlaw: "Gas prices in the UK are a third lower than in the rest of Europe"

Operating profits at British Gas jumped by 58% in 2009 to a record high, its parent company Centrica has said.

British Gas's residential energy arm saw its operating profit climb to £595m last year from £376m in 2008, beating the previous high of £573m in 2007.

The announcement comes just days after energy regulator Ofgem reported that energy firms' profit margins had risen in recent months.

Earlier this month, British Gas said it was cutting its gas prices by 7%.

Adjusted operating profit at Centrica fell 7% to £1.86bn.

It is clear the problems in the energy market are profound and that it requires fundamental reform
Philip Cullum, Consumer Focus deputy chief executive

Centrica chief executive Sam Laidlaw said British Gas's profit margin had been about 8% for 2009 and the company was aiming for about 7% this year. The group also said British Gas would create 1,100 jobs in 2010.

Centrica said it realised 2009 was "a difficult year for many of our [British Gas] customers".

British Gas is the UK's largest energy supplier. It gained 141,000 residential customers last year, taking the total number of households it serves to 15.7 million.

Transparency needed

Centrica chairman Roger Carr said: "British Gas was the first of the major suppliers to reduce prices in 2009 which, combined with reduced average consumption, provided a welcome reduction in bills."

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The company also said that British Gas had reduced its prices three times in the past 12 months.

However, campaign group Consumer Focus called for "immediate and significant price cuts across the market".

"Energy companies have no excuses for not cutting bills for their customers. It is clear the problems in the energy market are profound and that it requires fundamental reform," said Consumer Focus deputy chief executive Philip Cullum.

"Unlike the other members of 'Big Six', British Gas reports its results in detail and so takes much of the flak that deserves to be shared with the other companies. If ever a market was crying out for greater transparency it is the current UK energy market."

Ann Robinson, from the price comparison site uSwitch, said it was "time for the spotlight to be turned on the remaining five suppliers who are yet to say a word".

Rising margins

On Monday, Ofgem published a report saying that profit margins at energy suppliers had risen by an estimated £30 a year.

British gas van
British Gas is the only major UK energy supplier to cut prices this year

The average margin for dual fuel customers had risen to £105 a year in February, from £75 a year in November, the regulator said, although the energy industry disputed the figures.

And on Wednesday, Ofgem chief executive Alistair Buchanan warned companies not to "short change" customers.

Energy suppliers have faced questions about their prices at a time when wholesale costs have been falling.

Centrica chief Sam Laidlaw admitted: "We did get squeezed in 2008 as commodity prices rose."

But he added: "With the price reduction that we have just made we've passed reductions [in wholesale prices] back to consumer prices."



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FROM OTHER NEWS SITES
Guardian.co.uk Gas profits raise pressure for price cuts - 19 hrs ago
Telegraph Centrica warns of higher gas and electricity prices - 19 hrs ago
Wall Street Journal OnlineCentrica Fights Its Corner Over Calls For Price Reductions - 21 hrs ago
Fool.co.uk Record Profits At British Gas - 23 hrs ago
New StatesmanBritish Gas profits up 58 per cent - 24 hrs ago
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