Centrica puts lid on price rises


British GasBritish Gas owner Centrica has said that it made so much money from hard-pressed householders during the prolonged freeze at the start of the year that it is putting a lid on further price rises for the time being.

The energy giant cashed in after raising its prices by 6% in December, just before the start of the harsh weather, a period that saw customers increase gas consumption by nearly a fifth compared with last year.

But it said that because of the "economic pressures" facing many households it would not pocket the extra earnings, and instead would use them to prevent any further tariff hikes "for as long as possible".

However the pledge comes as cold comfort to many of its eight million customers, who are likely to be shocked by their next bills after cranking up their heating to keep out the bitter cold.
Richard Lloyd, executive director of consumer group Which?, said the announcement highlighted the lack of transparency in the energy market and that "radical action" was needed to provide simpler and fairer bills, more competition and easier switching between providers. He said: "With inflation-busting price hikes and eye-watering profits, it's no wonder less than a quarter of people trust the industry and rising energy prices consistently remain one of consumers' top financial worries. With a big leap in gas use over the winter, huge numbers of people will be shocked by their next bill."

Centrica has faced sustained hostility as it awarded soaring multimillion-pound pay packets to executives while households have struggled to pay rising energy bills. Its pledge to curb future price rises is an attempt to acknowledge publicly its customers' difficulties in the face of both the unforgiving economic climate and the weather.

The announcement came on the day of the company's annual general meeting in London. Earlier this year it disclosed that five bosses received £16.4 million in pay and bonuses as British Gas made profits of £606 million, equivalent to nearly £50 per household.

In Monday's trading update, Centrica said it had "performed well" so far in 2013, with its British Gas residential business on course to deliver full-year profits in line with expectations of £602 million - slightly down on last year due to higher costs.

It added: "As a result of the unusual period of extended cold weather, average residential gas consumption was 18% higher in the first four months of 2013 than in the same period in 2012, and average residential electricity consumption was 3% higher. Recognising the economic pressures facing many of our customers, the board has determined that any benefit arising from the exceptionally cold weather will be used to maintain our price competitiveness. As a result of this decision, we expect the residential energy supply business to deliver an operating profit for the full year in line with expectations, weighted towards the first half." A spokesman said: "We will use that to effectively hold prices for as long as possible."

The company said that so much energy was used over the extended cold period that volumes at its Rough offshore gas storage facility reached a record low level in April. Elsewhere in the update, it also said it had signed up 28,000 more energy customers over the first four months of the year, and had passed the one million mark for smart meters installed in homes and businesses.

10 consumer rights you should know

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