British Gas owner Centrica saw profits surge last year and warned today that it
is unlikely to be able to cut prices anytime soon.
The company, which faced criticism for lifting
gas prices by 15pc last month,
said that the wholesale prices it relies on have increased sharply since the
middle of 2007 and are likely to remain at lofty levels this year.
Chief executive Sam Laidlaw argued that "wholesale energy prices remain
extremely volatile and the high gas price at the start of 2008 has squeezed
retail margins in the UK."
The jump in oil to $100 a barrel has helped drive a range of energy prices
higher, including wholesale gas.
The increase in profits - to £1.87bn last year from £1.25bn in 2006 - has
already drawn rebukes from consumer groups who claim that British Gas has lifted
prices as the quality of service to customers has deteriorated.
Ann Robinson, the director of consumer policy for price comparison website
uSwitch.com, said: "British Gas is taking its customers for a ride. It has
come bottom in recent surveys of customer service, yet it has put its prices up
and massively increased its profits.
"It is very good at looking after shareholders but not at looking after its
customers."
Centrica's forecast comes as British families were warned this month by Bank
of England Governor Mervyn King to expect a decline in their standard of living
as rising food and fuel prices place household finances under severe strain.
Inflation in Britain is at a seven-month high, according to official figures,
driven by significant increases in petrol and food prices.
Chancellor Alastair Darling has also made clear that the utility companies
are in his sights and says he is horrified by the recent increases in prices.
Centrica, which is planning to increase its own production of natural gas to
cut its dependence on wholesale energy markets, said today that its priority for
this year is to improve the level of service to British Gas customers.
The company admitted service to customers had got worse in 2006 and the first
part of 2007 and plans to invest in the British Gas brand this year.
At British Gas, operating profits rose to £571m from £95m in 2006. However,
the company's share of residential customers for gas dipped to 46.4pc by the end
of last year from 47.9pc in 2006.
Sources:
http://www.telegraph.co.uk/
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