British Gas owner’s profits hit £1.5billion…the same amount that UK households are being overcharged for energy
British Gas - which has frozen prices until August - could be under fresh pressure due to a hike in its parent company’s operating profits
BRITISH GAS owner Centrica has fuelled further controversy over energy prices after reporting another profit rise at its British supply business.
It comes after MPs at the Business and Energy Select committee (BEIS) yesterday slammed the industry, complaining that energy firms continue to profit from loyal customers.
Millions of people - two in three households - are on standard variable tariffs. These tariffs are usually the most expensive - around £200 to £300 more a year more than the cheapest fixed-rate deal.
As a result, consumers in households across the UK - from all energy firms - are being effectively overcharged by £1.4billion a year, according to an investigation by the Competition & Markets Authority (CMA) last year.
Centrica said today that operating profits at the energy and services arm covering the UK and Ireland rose by 2 per cent to £906million last year, from £891million a year earlier, helping wider group operating profits at Centrica jump 4 per cent to £1.5billion.
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Although, profit in its UK homes business dropped to 11 per cent last year to £533million, from £623million in 2015.
More than 409,000 UK home customers left the business in the year to December 31, marking a 3 per cent fall to £14.25million.
Group chief executive Iain Conn said: "2016 was a year of robust performance and progress in implementing our customer-focused strategy.
"We delivered our key objectives including improved customer service and more innovative offerings and solutions - while repositioning the portfolio, building capability and driving significant cost efficiencies."
How to cut your energy bill
DESPITE British Gas promising to freeze prices for millions of households around the UK, consumers could still cut their bills and save money. Around 70 per cent of people are on bog-standard expensive standard tariffs, when they should be shopping around for a cheapest deal. If in doubt, call your provider and call other providers to ask them what their cheapest fixed tariff is. Better still, use a comparison website, like Energyhelpline.com, uSwitch or MoneySupermarket to find the very best deal for you. By switching providers you could save hundreds of pounds a year. Bear in mind that the amount you pay for your energy varies depending on where you live.
The industry has faced mounting pressure to treat loyal customers fairly and has been criticised for being slow to pass on falls in wholesale gas prices, with consumer groups hitting out at the size and timing of cuts.
Citizens Advice chief executive Gillian Guy, said: “British Gas continues to make big profits while its loyal customers’ bills remain high.
“Many people who have been with their energy company for years are paying much more than other customers because they’re on a standard variable tariff. And while offering a loyalty reward scheme is something, bringing down bills would do more to help struggling households."
Will Hodson, co-founder of consumer collective TheBigDeal.com, said: “British Gas announcing profits of half a billion pounds is a kick in the teeth for families across the country.
“It’s no wonder that British Gas’s profits are so huge when millions of British Gas customers are being overcharged by hundreds of pounds a year.”
Yesterday, British Gas unveiled plans for a new loyalty scheme for its 11 million customers.
Its longest-standing customers will get the biggest discounts, but critics warned that it could lead to some customers paying more, as they hold off from switching to a better deal.
British Gas is one of few so-called Big Six energy suppliers to have frozen prices in recent months.
Companies including Npower, EDF and Scottish Power have hiked customer prices, with many blaming rising wholesale costs.
Scottish Power recently announced that standard gas and electricity bills would rise by 7.8 per cent from March 31, while Npower set out plans to hike gas and electricity prices by 9.8 per cent - a move that will add £109 to annual dual fuel bills.
Yesterday, Ofgem boss Dermot Nolan admitted that he has “no direct power” over firms who announce price hikes.
Centrica said revenues for 2016 dropped 3 per cent to £27.1billion, versus £28billion a year earlier.
But the company managed to swing to a pre-tax profit of £2.2billion, after reporting a £1.1billion loss due to a write down last year.
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