British Gas accused of profiting at expense of customers

Last week British Gas – the UK’s largest energy supplier – said it was cutting gas prices by 5.1%, the last of the big six energy suppliers to do so.

British Gas said wholesale market costs only make up around 38% of a dual fuel bill and only around a third of electricity bills.

British Gas gross revenue fell 4% to £12.4 billion, primarily as a result of lower average sales prices reflecting the lower price environment and a lower number of business energy supply points.

The company said that should current low wholesale prices continue beyond this year, it has the flexibility to reduce its E&P capital expenditure further to the bottom end of its £400-£600m range.

As competition from smaller energy suppliers is heating up in Britain, Centrica lose 119,000 customer accounts in 2015.

The results come a week after 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.

But for investors, the fact that Centrica has demonstrated a “resilient financial performance in a challenging environment”, will be pleasing.

Direct Energy (North America): operating profit more than doubled to £328m, helped by much colder than normal weather at the start of 2015 and no repeat of additional Polar Vortex related costs incurred in 2014.

It has said previously it is unable to lower electricity prices due to rising costs, such as for network delivery.

The wider Centrica business was impacted by plunging commodity prices, with the cost of oil more than 70% below peaks seen in the summer of 2014.

Iain Conn, the Centrica chief executive, said the group was performing well in hard circumstances and there would be no cut in the dividend to shareholders.

“We remain confident we can deliver at least three to five per cent per annum operating cash flow growth at flat real commodity prices and are committed to delivering a progressive dividend in line with the sustainable operating cash flow growth of the group”.

It said 3,000 roles are expected to go this year.

Shares in the FTSE 100 Index-listed group rose 3% as the drop in earnings was lower than feared in the market.

When the Competition and Markets Authority’s (CMA’s) delayed investigation into the energy market is released, its likely even more pressure will be put onto suppliers to make cuts to their standard prices, and not just gas.