Cold snap boosts profits at British Gas owner

Centrica says it will try to avoid more price rises for as long as possible as it faces protests at annual meeting on Monday

British Gas's owner, Centrica, enjoyed a huge boost from the cold snap as consumers turned up the heating, driving consumption up by almost a fifth compared with last year.

The company, which raised prices by 6% shortly before the harsh winter set in, said any benefit from the "exceptionally cold weather" would be used to prevent further price rises "for as long as possible".

The finance director, Nick Luff, said: "The fact is we make a margin selling gas. We will have made a higher margin because of the extra volume and we will use that to keep prices down during the rest of the year."

But he said the cost of implementing the government's energy efficiency scheme and higher transport costs would hit profits, while the gas price remains unpredictable – meaning there may be little extra to invest in keeping prices low.

The energy comparison and switching service uSwitch.com still welcomed the news at a time when consumers are struggling to pay bills. Ann Robinson, director of consumer policy at uSwitch.com, said: "British Gas has recognised the pressure facing customers and is using the financial gain from the extended cold weather to maintain its competitiveness. In plain English, this means that British Gas customers should expect no further increase in prices at least for the foreseeable future."

Gas consumption has surged during the cold snap

Centrica faces protests at its annual meeting in London on Monday afternoon as campaigners gather to challenge the company on price hikes, multimillion-pound payouts to British Gas bosses and plans for a new generation of gas power stations instead of cheaper, clean renewable energy.

Households' average gas consumption was 18% higher in the first four months of 2013, compared with the same period last year, while electricity consumption was 3% higher. Residential customers in the UK also rose by 28,000 in the first four months of the year, which Centrica put down to competitive pricing and good customer service.

The company said this "strong performance" put it on course to meet expectations and deliver full-year profits before tax of £602m, down 1% on last year.

As an oil and gas producer, Centrica also benefited from higher commodity prices, and the group's full-year earnings after tax are expected to be 2% higher at £1.4bn.

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Article source : http://www.guardian.co.uk