James Rossiter
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Millions of homeowners face a second rise in the gas and electricity bills this year as British Gas owner Centrica grapples with a slump in its profits.
British Gas customers were dealt a 15 per cent rise in their energy bills in January as the company struggled to deal with the near doubling in the cost of buying gas in the wholesale markets.
That price rise did not go far enough for Centrica however as a trading update revealed that as the continued rise in wholesale gas prices "has caused profit margins in British Gas in the first half of the year to be squeezed to levels below our long run expectations."
British Gas has lost 100,000 customers since the January price rises, leaving total customer base at 15.9 million the company reported today. The group had 17.7 million British Gas customers at the start of 2005.
The loss in customers however will not stop Brtish Gas from hiking its prices again shortly. Centrica warned today in a statement to the stock exchange: "While the current outlook for gas prices does create a challenging environment for energy suppliers, we will take the necessary action to deliver reasonable margins in the retail business."
Centrica is also suffering from being held to about 16 large loss-making energy contracts struck years ago directly with large UK industrial companies. The company previously guided that losses for these contracts would be between £100 million and £200 million this year. The recent hike in wholesale gas prices however means that losses on those contracts are now expected to be "materially higher than previous guidance."
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I think we need to look at this the government are taxing the whole sale cost of gas by upto 72%! So I think some blame can be apportion there. Just like pertol 98% TAX. Also what is the point in privatision if they are all going to charge the same anyway. It's more like a cartel. I pity the old ppl
Niall, Glasgow, Scotland
since 2004 british gas have been overcharging me, wrong billingand no billing, at one point i was £640.00in credit,but they would not give this to me, so for four yearsi have and still am being ripped off, i have been payingthem at the rate of £1000.00 for a one bed flat and pensioner living alone
laura, radcliffe gr manchester, england
One can live without gas, one can use electricity only for the time being and then find a new way to generate power, I am sure there are many ways. And then British Gas and all the gas companies can heat themselves a lot.
Regards
Giancarlo, London, England
£570m profit is not excessive. Get real. BG is not a charity and if the UK consumers expect the lights to still be on in a few years time organisations need to re-invest in new power plants. At c £30 profit per customers per annum, balanced against the massive risk in this sector, this is low return
Julia LW, Worcester,
And wholesale gas prices are paid for in which currency? Euros per chance? More Sterling devaluation will mean more of the same.
Paul, Coventry,
Why so much angst? If the price of wholesale energy rises, pretty-much all of that increase has to be passed on to the consumer. Sure it's hard, but that's life. And get used to it folks, there are probably many more increases to come.
Jim McLaughlin, Calgary, Canada
Operating profits?
£100 to £200 million loss on what profit figure?
Last Year they made £571 million profit....
So this year are they just going to clear £371 million- profit?
In 2006 they made £95 million only- so now it's bad if they only get nearly four times that?
This sucks.
Jez W, Leeds,
"We never suffered price rises when we used coal gas". Quite sure about that, it is remarkable how we have all airbrushed the 1970's from history, we remember the flares, the sit-coms and the music
but our nostalgia never extends to the power cuts and rampant inflation. Google STAGFLATION.
Mark, Epping, Essex
CPI measures the acceleration of price in a fixed basket of goods and services. The UK "Core" CPI excludes volatile prices like fresh food and energy, alcoholic beverages, tobacco, taxes and housing costs. For this reason it is often preferred as a measure of inflation by the government
Hazelj, london, england
Another of the power companies raised thei rprices last week, I expect to see the rest raise their prices within the next few weeks. This stops people changing suppliers, as by the time you've changed all prices have gone up. Competition?
David Leslie, Perth, Scotland
The thing is we are all slaves!
Slaves we are because we are obliged to use these big firms. What about developping our own forms of energy and make these big companies become little shops?
Regards.
Giancarlo, London, England
This is simply outrageous! If the governement are keen to grab back some favour with the electorate they should step in and stop this from happening. Similarly so should OffGas. Centrica simply need to become a more efficiently run company.
Sid, London,
Why don't we return back to coal gas commonly know as town gas
We never suffered huge price rises when using this gas
we have the coal mines and many other countries around the world are turning back to coal
We would not have to rely on unstable countries like russia for our gas
spence fleetwood, Irby, uk
The CPI is only 2.5%.Does this include gas or it that excluded along with most other essentials.
stephen hulton, eure, france
Many older people will sadly die as a result of this action, which will realistically mean a 30% increase on their current gas bill.
Shame on us all !
Richard, London,