Price hike and warm weather blamed for Centrica profit slide

SCOTTISH Gas-owner Centrica yesterday blamed a mild start to the winter, the weak economy and the impact of bill hikes on consumers for a profits slowdown.

The energy supplier said average residential gas consumption was 17 per cent lower this year compared with a year ago, with electricity usage down by 3 per cent 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 per cent and 16 per cent respectively from August.

The utility, whose British Gas and Scottish Gas arm is the UK’s biggest household energy supplier, said customer churn – the number of customers switching supplier – had risen since it raised prices. The drop in account numbers, which one analyst put at close to 100,000, was also due partly to Centrica ending doorstep sales in response to pressure from consumer groups. 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 to £2.4bn in 2010.

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

Mark Todd, director of price comparison service Energy- helpline, said people were increasingly turning down their heating to save money because they could not afford their energy bills and urged British Gas to cut prices to win back domestic customers.

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

In residential services, the number of central heating installations was 10 per cent lower than a year ago.

Earlier this week Centrica said it was looking to cut about 850 jobs from its services business as part of an ongoing review to identify cost savings across the group, including in its UK power generation division.

The UK’s rising dependence on energy imports is helping to make household bills less affordable than at any time since the oil shocks of the 1970s.

Deutsche Bank has said that, with price rises of 25 per cent predicted by 2015, a quarter of the country could fall into fuel poverty.

Shares in Centrica eased 0.2p to 294.6p.