Centrica hints at more price rises

British GasBritish Gas owner Centrica has hinted at further price rises for hard-pressed customers as it announced profits from its residential arm rose by 3.2% thanks to the freezing spring weather.

Earnings increased to £356 million during the first half of 2013, as the company cashed in on the bitterly cold temperatures after raising tariffs 6% at the end of last year.

Revenues from household supply of gas were up 16% to £3.7 billion, compared to the same period in 2012, as Britons cranked up the thermostats. Average residential consumption by volume was up 13% for gas and 1% for electricity.

Operating profits at parent company Centrica were up 9% from £1.45 billion to £1.58 billion. The results sparked anger and calls for British Gas to keep a lid on tariffs. Its profits were held back by a new duty to pay for energy efficiency measures in customers' homes, which helped push environmental costs up 37% for the period.

Centrica warned that the scheme, which has landed it with a £1.4 billion bill, would "inevitably impact on customer bills ultimately" and that it was facing "upward pressure on costs".

Finance director Nick Luff said: "We will keep prices as low as we can for as long as we can. If prices do have to go up, we will delay it for as long as possible." He defended the £11 million increase in profits for British Gas residential energy supply, saying it represented just 70p per customer.

The company serves more than 11 million households, with nearly 16 million customer accounts. It pointed out that its profit margin for the residential business fell from 7.2% to 6.5%, meaning it was making less money as a percentage of its revenues and only increased profits this time because of the unusual weather.

But Len McCluskey, general secretary of the Unite union, said: "These profits will anger a growing number of families who are struggling to pay the bills, made worse when the fuel companies hiked their charges last year.

"There should be a commitment from British Gas and the other fuel providers, all of whom have done very well out of the British people, to cut prices for customers this coming winter."

Mike O'Connor, chief executive of Consumer Futures, called for Centrica to keep a lid on prices after benefiting from the cold weather. He said: "Wholesale gas prices have not risen significantly and their gas production and much of their generation business has done well. Those factors should give British Gas confidence to hold its prices."