British Gas – the original de-nationalised utility energy provider of the Thatcher-era government in the 1980s which became a by-word for corporate fat-cattery – is still lapping up the corporate cream as it yesterday reported a 30% rise in profits to £574 million for the year ending 31 December 2015.
The rise in operating profits compared with £439 million for the previous year. British Gas said gas usage rose by 5% despite the warmest UK December on record, as 2015 had more normal temperatures compared with a very mild 2014.
However, profits at its parent company, Centrica, fell by 12% to £1.46 billion as wholesale gas prices fell sharply.
Ian Conn, Chief Executive of Centrica – which owns the Scottish- and British-gas branded utility businesses, said that the rise in profits was ‘not because of the fall in commodity prices’ and that the drop in wholesale costs had been passed on to customers.
He said that the wholesale costs were ‘only part’ of the cost of householder bills and added: “The reason the profits went up in 2015 compared to 2014 actually is very simple – it’s about the weather and about consumption.
“We saw a very mild 2014 and we saw a more normal 2015 and therefore the amount of energy that our customers used went up and therefore the actual total profit went up.”
Last week British Gas – Britain’s 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 after E.On, EDF, SSE, Scottish Power and Npower, which all cut gas prices by around 5%.
However, David Hunter, energy analyst at Schneider Electric, said last night that despite these reductions by Britain’s Big Six energy providers, consumers are still paying too much.
He said: “The Big Six have only just completed a full round of gas-only price cuts but the results have been disappointing.
“With prices slashed by only 5%, standard tariffs are little more competitive than they were, and still a long way off the fall in wholesale prices. The profits announced from British Gas today will raise further questions about why more hasn’t been done to make energy prices truly competitive across the board.
“With ‘default’ standard tariffs still up to £450 a year more expensive than the best deals, consumers are still missing out on substantial savings and being left out of pocket as a result.
“The message consumers should take from this is simple: don’t stick your head in the sand and shop around to find one of the many more competitive offers available in the wider market.
Furthermore, invest some of the savings from those deals into energy efficient measures at home, like low energy lighting, or towards buying a greener car. Not only does this safeguard future family budgets but the action taken will force suppliers to compete more effectively.”
British Energy minister Amber Rudd, commented: “I have made it crystal clear to the bosses at the Big Six that consumers expect a fair deal.
“Recent price cuts are a step in the right direction but there’s more to do and I will continue to champion the families and businesses who pay the bills and work to ensure they are kept as low as possible.
“The Big Six need to play their part and I am watching them like a hawk.”
“Thanks to Government action, there are now 37 energy suppliers to choose from – more than ever before. More competition means better deals for everyone and I am determined to empower consumers so that they do switch to those better deals.
In the 1990s – after a series of ‘prices rising like rockets’ and record-profit announcements by British Gas – Alex Salmond, then -– and now – an SNP MP supported public and staff protests over the 900% wage increases paid to then British Gas chief executive Cedric Brown.