British Gas sees profits rise 31%

Profits at British Gas have risen by 31% to £574m for the 12 months to 31 December as gas consumption increased.

The rise in operating profits compared with £439m for the previous year. 

British Gas said gas usage rose by 5% despite the warmest December on record, as 2015 had more normal temperatures compared with a very mild 2014.

 

However, profits at its parent company, Centrica, fell by 12% to £1.46bn as wholesale gas prices fell sharply.

Last week British Gas - the UK's largest energy supplier - said it was cutting gas prices by 5.1%, the last of the big six energy suppliers to do so.

E.On, EDF, SSE, Scottish Power and Npower have all cut gas prices by similar amounts.

'Resilient' performance

Energy suppliers have been under pressure to pass on savings to customers after a 57% drop in wholesale gas prices since this time last year.

But Centrica's chief executive, Iain Conn stressed that the rise in profits was not because of the fall in commodity prices and that the drop in wholesale costs had been passed on to customers.

"The reason the profits went up in 2015 versus 2014 actually is very simple - it's about the weather and about consumption," he told the BBC.

"We saw a very mild 2014 and we saw a more normal 2015 and therefore the amount of energy that our customers used went up and therefore the actual total profit went up."

The Competition and Markets Authority has been conducting a wide-ranging investigation into the UK's energy suppliers since last summer.

It estimates that consumers overpaid by £1.2bn a year between 2009 and 2013.

Electricity bills

Ann Robinson, director of consumer policy at uSwitch.com, said: "British Gas has cut standard gas prices three times in the last past year, but it should now go further and reduce electricity bills too."

However, Mr Conn said that this was because of other costs that make up electricity bills, such as transport and distribution, higher metering costs and government levies.

As well as selling energy through British Gas, Centrica is also a major producer of natural gas and oil.

The company wrote down the value of its oil and gas assets and power stations by £2.4bn.

Those charges contributed to a statutory operating loss of £857m, although that was lower than the £1.137bn for 2014.

Centrica shares, which have fallen by a third in the past 12 months, rose 3.7% to 199.5p in early trading on Thursday.

The company has proposed a final dividend of 8.43p, resulting in a full-year dividend of 12p a share - down from 13.5p for 2014.

Earlier this month, British Gas announced 500 job cuts, mostly in its energy efficiency business.