Centrica, the owners of British Gas will announce huge profits this week fuelling anger as millions of households have had to pay record prices for their gas and electricity this winter.
Centrica is expected to announce a group operating profit of around £2.5 billion and British Gas will follow EDF is announcing higher profits despite lower sales and usage due to the warmer winter.
The record profits will be particularly galling to many customers as they come at a time when fuel poverty is growing. Households are defined as being in fuel poverty when the cost of heating and powering their home takes up more than ten per cent of overall household spending. uSwitch estimates that 5.5 million UK households are now in fuel poverty.
Ann Robinson, Director of Consumer Policy at uSwitch.com, urged suppliers to pass on further price cuts: “Over eight in ten UK households have been cutting down or rationing their energy use this winter because of the high cost of energy. Any further price cut would give much-needed help to the millions who are struggling to afford their bills."
However, Centrica will argue that it is re-investing much of its profits into securing energy supplies for the future and that it can only do this if it is a profitable company. Centrica boss Sam Laidlaw will point out that his company has invested £1.80 for every £1 it has earned in the last five years.
Centrica are expected to say that British Gas profits fell by around a quarter to £550 million for 2011, caused by the increase in the wholesale cost of gas and the mild weather which led to less usage this winter. British Gas supplies power to around ten million UK homes.
Centrica made money in 2011 from its oil and gas exploration and production unit as well as its service business which repairs boilers.
Audrey Gallacher, Director of Energy at Consumer Focus, said that customers will be confused by how energy firms can make big profits during a mild winter: “Profits have risen despite lower energy use in the milder winter. This will leave many customers wondering whether energy prices can, and should, be cut further.
‘We need successful, profitable companies. But consumers need to know big profit margins are not being made needlessly at their expense.”
British Gas increased the standard cost of its gas by 18 per cent and electricity by 16 per cent in August 2011 for UK customers. It lowered the cost of gas by five per cent last month.
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