Winter Profits To Help Keep Gas Prices Down

The owner of British Gas says it is to use higher profits from the cold winter to help prevent new bill increases.

Centrica said residential gas use rose 18% in the first four months of the year as much of the country shivered amid freezing temperatures and heavy snow.

But the energy firm, which raised prices by 6% before Christmas, said that instead of pocketing the extra earnings it would use them to prevent any further price rises "for as long as possible".

In a trading update ahead of its annual general meeting, Centrica said British Gas was on course to deliver full-year profits in line with expectations of £602m - slightly down on last year due to higher costs.

It said: "Against a background of sustained cold weather and periods of higher commodity prices, Centrica has performed well in the year to date."

The company said UK customers had increased by 28,000 over the first four months of the year due to "a competitive pricing position and continued good levels of customer service", and revealed the major impact of freezing conditions on its revenues at the start of 2013.

"As a result of the unusual period of extended cold weather, average residential gas consumption was 18% higher in the first four months of 2013 than in the same period in 2012, and average residential electricity consumption was 3% higher," it said.

"Recognising the economic pressures facing many of our customers, the board has determined that any benefit arising from the exceptionally cold weather will be used to maintain our price competitiveness."

Ann Robinson, director of consumer policy at uSwitch.com, responded: "This is welcome news when the majority of consumers are struggling to pay their household energy bills.

"British Gas has recognised the pressure facing customers and is using the financial gain from the extended cold weather to maintain its competitiveness, In plain English, this means that British Gas customers should expect no further increase in prices at least for the foreseeable future.

“However, customers should still not be complacent. There is currently over £320 difference between the cheapest and most expensive energy tariffs on the market and with significant differences creeping in on standing charges it’s even more important that consumers shop around the whole market as even greater savings can be made."

Ahead of the latest price rises to bills, energy firms were at pains to argue that their profit margins were low due to high wholesale costs and other regulatory commitments.

EDF Energy said this year that it was still selling gas and electricity to customers at a loss.

However, there is concern that the continuing squeeze on consumer spending will mean that thousands of households will miss payments for higher bills in the wake of the winter cold.

Earlier this year, Centrica was criticised as "insensitive beyond belief" as it announced five bosses received £16.4m in remuneration at a time of soaring bills.

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