Mild weather hits energy usage

Sunrise in LondonBritain's mild start to the winter and the impact of bill hikes has forced British Gas owner Centrica to scale back its profit forecasts.
The energy supplier said average residential gas consumption was 17% lower this year compared with a year ago, with electricity usage down by 3% after the unusually warm weather in recent months.

The number of customer accounts has also fallen to 15.9 million from 16.1 million in the summer after the UK's biggest energy supplier lifted gas and electricity prices by an average of 18% and 16% respectively from August.

Centrica said it now expects operating profits for 2011 will be marginally lower than current market expectations of £2.6 billion, a figure which compares with a surplus of £2.4 billion in 2010.

Prior to the update, analysts had expected a 20% fall in profits at the British Gas Residential business to around £600 million.

Centrica said wholesale gas and oil prices were 26% higher this winter than last year and added that its residential business was loss-making prior to the announcement of higher tariffs.

Average consumption by business customers has also been affected by the mild weather and weak economic conditions, with a reduction in usage of 15% for gas and 12% for electricity.

In residential services, the number of central heating installations was 10% lower than a year earlier.

While this is better than the overall market, Centrica announced on Wednesday it will cut around 850 jobs after reviewing resource levels in its services business.

The move is part of an ongoing review to identify cost savings across the group, including in its UK power generation division.

© 2011 Press Association
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