20/Aug/2014 - Last News Update: 07:03

Centrica criticised over profits while raising prices

Category: Business

Published: 17th Nov 2010 12:32:53

Centrica, which owns British Gas, says its operating profits for 2010 will be slightly higher than City analysts' expectations of £2.2bn.

Last week British Gas announced a forthcoming 7% rise in domestic gas and electricity charges, blaming rising costs.

Consumer Focus, a government watchdog, suggested the company was taking advantage of its customers.

But Centrica said wholesale gas and electricity prices were rising sharply.

"The wholesale cost of gas for 2011 is 25% higher than for 2010, and the wholesale price for electricity is 14% higher," said a Centrica spokesman.

"That is what is driving up bills."

Consumer Focus, the government's official consumer watchdog, said customers would be baffled as to why they were being asked to pay more when Centrica was on track to make huge profits.

"This begs the question, yet again, of why customers have seen only tiny price cuts when wholesale costs have been so low for so long, yet suppliers hike prices as soon as wholesale costs start to edge up," said Audrey Gallacher at Consumer Focus.

In July, Centrica, which has other substantial energy businesses apart from British Gas, said its half-year profits had been boosted by the then low level of wholesale gas prices.

It will remain impossible to tell whether bills are fair ”

Now, it says domestic prices need to rise again because wholesale prices for the delivery of gas and electricity next year have started to go up.

"Other costs, such as network charges and environmental obligations, are also rising," Centrica said in a statement to investors.

"This has necessitated an increase in our residential gas and electricity prices of 7%, which we announced on 12 November and which will take effect from 10 December," it added.

Consumer Focus accused Centrica of taking advantage of the opaque nature of both the wholesale and retail sides of the energy market.

"Unless there is a major injection of transparency into this increasingly complex sector, it will remain impossible to tell whether bills are fair and the market is working properly," the watchdog said.

"Customers are facing complicated and confusing tariff structures, with unclear headline discounts, penalties and rollover contracts leaving customers at a disadvantage."

The decision of British Gas had been preceded by a similar one from another of the big six energy suppliers - Scottish and Southern Energy (SSE).

The online price comparison service Moneysupermarket.com described the Centrica profits forecast as a "kick in the teeth" for customers.

"Its eight million customers now are now facing a £82 increase, taking bills to £1,239 on average a year."

"Forward wholesale gas and power prices are significantly higher for 2011 than they have been in the current year, so could this be a sign there are further price rises on the bleak horizon?"

EDF, another of the big six, has said however that there will be no tariff increases until at least March 2011.

Source:
BBC News External Link Show Citation

Latest News

Harvard Citation

BBC News, 2010. Centrica criticised over profits while raising prices [Online] (Updated 17th Nov 2010)
Available at: http://www.ukwirednews.com/news/108731/Centrica-criticised-over-profits-while-raising-prices [Accessed 20th Aug 2014]

News In Other Categories

  • Rapper Professor Green to headline MTV Crashes concert

    Rapper Professor Green is to headline a massive music concert in Londonderry.
  • Marion Cotillard confronts redundancy fears

    She's topped the list of France's highest paid actors - but in her new film, Two Days and One Night, Oscar-winner Marion Cotillard plays a factory worker who is forced to beg her colleagues to save her job under the threat of redundancy.
  • Youth mental health care 'in dark ages', says minister

    Mental health services for young people in England are "stuck in the dark ages" and "not fit for purpose", according to a government minister.
  • Japan exports growth fuels recovery hopes

    Japanese exports showed a surprise rise in July, reigniting hopes of growth for the world's third largest economy.
  • Marion Cotillard confronts redundancy fears

    She's topped the list of France's highest paid actors - but in her new film, Two Days and One Night, Oscar-winner Marion Cotillard plays a factory worker who is forced to beg her colleagues to save her job under the threat of redundancy.
  • Bristol Academy extends reach overseas with first foreign students

    With the doors to its brand new £1million training centre officially open, one of the UK's leading apprentice training providers, Bristol based S&B Automotive Academy, is showcasing its world-class facilities by launching a series of foreign student exchanges for the first time in its 41-year history. To get a flavour of what life is like as an apprentice in the UK, the Academy hosted 16 apprentice engineers and bus drivers from the G9 Automotive College in Hamburg, Germany, as part of a Europe-wide vocational training initiative called the ‘Leonardo Programme’ with support from the European Social Fund. In a reciprocal arrangement, S&B will be sending nine apprentices to Germany during February 2012 so that they can get an appreciation of life in the automotive industry on the Continent. A further three German exchange groups are being planned for next year. Designed to assist the development of vocational skills and training across Europe, including work placements for trainees, the Leonardo Programme has a budget of €1.75bn, which is helping to encourage UK organisations to work with their counterparts abroad. In what is expected to be another challenging year for employers in the UK automotive sector, S&B’s Chief Executive, Jon Winter, claims that the exchange initiative will bring many benefits to the Academy and its apprentices: “In a world of global automotive brands, it’s important for our learners to understand the international context of the industry they have chosen to make their career. This new exchange programme will enable apprentices and Academy staff alike to achieve a better understanding of the challenges and opportunities within the automotive arena in Europe. With the Academy’s influence also extending to the USA and Asia, there’s every possibility that this initiative could move further afield in the future.” Continued Winter: “The need for skilled technicians across the world is on the increase and we actively encourage our apprentices to look at broader horizons during their training. Many of them have already learned the phrase ‘Vorsprung durch Gelehrtheit’, quite simply, ‘Advancement through learning.” In the 2010/11 academic year, S&B doubled the number of successful Apprenticeships over the previous year with some 350 apprentices graduating from the Academy. At the same time, achievement levels reached an all-time high with an overall success rate of 85%. For those learners on the Advanced Apprenticeship three-year programme, success rates were even higher, at over 98%. PHOTO CAPTION: As part of their exchange visit, S&B Automotive Academy arranged for the German apprentices to visit Hampshire bus operator, Bluestar, at its Barton Park depot. The students are pictured with S&B’s Andy West (3rd right) and Steve Prewett, Bluestar’s Area Engineering Manager (2nd right). Ends http://www.sandbaa.com