British Gas warns of ‘green’ price rise

Sam Laidlaw, Chief Executive of Scottish Gas' parent company Centrica. Picture: Ian Rutherford

Profits for the residential arm of the energy giant jumped by 3.2 per cent for the first six months of the year, with earnings increasing to £356 million.

The company’s profits boost came after this winter’s bitterly cold temperatures, as well as a controversial six per cent rise in tariffs at the end of last year.

Centrica claimed its profits would have been higher but were held back by a new duty to pay for energy-efficiency measures in customers’ homes, which helped push environmental costs up 37 per cent for the period.

The firm warned that the scheme, which has landed it with a £1.4 billion bill, would “inevitably impact on customer bills” 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 £11m increase in profits for British Gas residential energy supply, saying it represented just 70p per customer. The firm serves more than 11 million households.

It pointed out that its profit margin for the residential business fell from 7.2 per cent to 6.5 per cent, meaning it was making less money as a percentage of revenues and only increased profits this time because of the unusual weather.

Chief executive Sam Laidlaw said: “With our customers using more gas to stay warm during the unusually cold winter, we’re doing everything we can to help them keep their energy costs under control and make bills simpler and clearer.”

However, politicians last night accused the company of making excuses to introduce another increase in fuel bills.

SNP MSP John Wilson called on Centrica to use its profits to pay for energy efficiency rather than increasing household fuel bills. He added: “Companies like Centrica have to be more transparent in how they present their annual accounts if they are going to attempt to justify price increases in this way.

Tory MSP Alex Johnstone said consumers are already “paying through the nose” to heat their homes. He said: “Environmental measures such as the generation of green energy do have a cost, but this cost is already being met by the consumer.

“The cost of energy efficiency in homes is a minor part of most bills and the onus should be on companies to provide energy at affordable levels.”

Labour MSP Lewis Macdonald insisted that energy efficiency costs did not justify a further increase in fuel bills.

He said: “Companies should protect people from high prices. Big energy companies are quick to put prices up, but not down.”