Scottish Gas owner Centrica reveals rise in earnings

Scottish Gas owner Centrica has fuelled further controversy over energy prices after reporting another profit rise at its supply business.

Scottish Gas has frozen its standard tariff until August. Picture: John Devlin
Scottish Gas has frozen its standard tariff until August. Picture: John Devlin

The group said operating profits at the energy and services arm covering the UK and Ireland rose by 2 per cent to £906 million last year, from £891m a year earlier, helping overall operating profits at Centrica jump 4 per cent to £1.5 billion.

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The company is expected to face fresh calls to address tariffs for businesses and domestic consumers. The industry has faced mounting pressure to treat loyal customers fairly and has been criticised for being slow to pass on falls in wholesale gas prices, with consumer groups hitting out at the size and timing of cuts.

Scottish Gas has announced it is extending a price freeze on its standard energy tariff until August, “despite increases in external costs”, but customers are expecting prices to soar later this year, following the Brexit-induced collapse of the pound and rising wholesale energy prices.

Centrica’s British Gas residential energy supply arm, which only covers UK homes, reported an 11 per cent drop in operating profit to £553m, compared with £623m in 2015, but said the reduction was due in part to a customer exodus.

More than 409,000 UK home customers left the business in the year to 31 December, marking a 3 per cent fall to 14.25 million. But the group said it stemmed the outflow in the second half of the year after launching new tariffs and improving customer service.

Group chief executive Iain Conn said: “2016 was a year of robust performance and progress in implementing our customer-focused strategy.

“We delivered our key objectives including improved customer service and more innovative offerings and solutions – while repositioning the portfolio, building capability and driving significant cost efficiencies.”