Consumer groups have warned of “unfair treatment” of energy customers after British Gas unveiled a 31 per cent jump in profits at its residential energy supply arm – days after dropping gas prices by just 5 per cent.
The Scottish Gas owner, which saw profits jump to £574 million from £439m in 2014, last week announced a 5.1 per cent cut in gas tariffs from 16 March, which was branded as “too little, too late” by consumers’ groups.
The rise in profits of almost a third came despite a dip in earnings at parent company Centrica, which said it had been hard hit by plunging commodity prices. As well as providing energy to domestic customers, Centrica is an oil and gas production company.
James Padmore, head of energy at comparethemarket.com, said: “While profits at parent company Centrica have dipped, British Gas profits have leaped 31 per cent as consumers’ bills continue to rise.
“The company is attributing this to increased energy usage but it is difficult to rationalise a profit hike of nearly a third, on this basis, at the same time as plummeting wholesale energy prices.”
British Gas is one of a number of suppliers which have opposed a proposed Competition and Markets Authority (CMA) “default tariff”, which would set a maximum price, or ceiling, on home energy charges. Ann Robinson, director of consumer policy at uSwitch.com, said: “Hearing news of rising profits when wholesale energy prices have tumbled will leave many British Gas customers wondering if they’re being treated fairly.
“Seeing a major supplier report increased profits at a time of sustained low wholesale prices should strengthen the CMA’s determination to fix the broken energy market. We are urging the CMA to put forward bold recommendations to get more consumers shopping around for energy to increase competition, lower prices and improve customer service.”
Which? executive director Richard Lloyd said: “With British Gas today announcing residential profits are up, customers will be asking why energy suppliers have only cut their gas prices by such a paltry amount.”
The CMA said in July that British households were overpaying suppliers for their energy by around £1.2 billion a year and failing to switch to get the best deals. It has been carrying out a wide-ranging investigation into the energy market since the summer of 2014.