GAS giant Centrica was blasted today after revealing it has made a £992 MILLION profit - the day after hitting millions of customers with a record 35 per cent hike in gas bills.
The group - which owns British Gas and is Britain's biggest domestic energy supplier - also announced it is making a £144m dividend payout to shareholders.
The group said the price increases were necessary to restore `reasonable profitability' to British Gas, as profits fell by 69 per cent to £166m - and invest in additional gas and power assets. But the news sparked anger from consumer watchdogs.
Adam Scorer from Energywatch said households would be `staggered' at Centrica's profits. He added: "Customers will be outraged to learn that while they ponder how to make ends meet Centrica's shareholders are enjoying an increase in their dividends."
And Tony Woodley, joint leader of the Unite union said: "This combination of massive profits and eye-watering price rises proves that the privatised provision of basic utilities has failed the public.
"They should be taken back into some form of ownership by the community. It is obscene that shareholders should be getting a boost while consumers are facing the prospect of unaffordable price rises."
The half-yearly figures show Centrica's operating profits are down 19 per cent on last year after the group felt the impact of rising wholesale costs at British Gas. But while British Gas earnings were down more than two-thirds from last year's £533m - when Centrica waited before passing on rapidly falling wholesale prices - the firm's production business saw a five-fold jump in profits.
Centrica's gas production and development operation benefited from this year's soaring gas prices to post operating profits of £638m, compared with just £123m during the previous year.
Chief executive Sam Laidlaw said: "We produced a good set of results in tough market conditions and against a record first half in 2007."
He defended the 16 per cent jump in the dividend payout to shareholders as a `purely mechanical' payout based on the company's strong performance during the previous year.
Despite the price hikes at British Gas, Centrica said it had made strides in improving the efficiency of the business in a trading environment `dominated by high wholesale energy prices'. It has cut 8 per cent of its staff and is on track to make £60m in cost savings.
British Gas said it had had to raise prices - despite the pressure on households struggling to cope with surging food, petrol and mortgage costs - because of increasing global demand, diminishing UK gas reserves and record oil prices pushing up its costs.
And rivals are sure to follow after Scottish & Southern Energy last week said it was becoming `more difficult by the day' to resist hitting customers with higher bills.
Money-saving expert Martin Lewis said he was `unsurprised' at the British Gas price rise, warning: "This is not the end of it by any means. British Gas has already hinted it needs to in
crease prices by around 60 per cent to catch up with wholesale gas prices, which means another hefty rise in the new year.
"One effective way of saving money until now has been to opt for a capping deal, where a customer can lock into a current pricing deal. But energy companies are pulling the plug on these opportunities very quickly, and anyone who wants to take advantage of what is left is going to have to act fast."
The cheapest capping deal for most people, operated by Scottish Power, disappeared from comparison sites on Tuesday, though may still be available direct. The only fully available one is from E-on.
Martin's MoneySavingExpert.com website is keeping consumers up to date with a special Cap Watch facility, but he said: "My advice when they've all gone, is to sit tight. There is no point ditching British Gas because they have now increased gas prices by a total of 55 per cent this year, when other energy companies are certain to follow suit."
Until the last couple of years, most of Britain's gas came from the North Sea. But, as reserves diminish, an increasing amount is being imported from countries such as Norway, Nigeria, Saudi Arabia and Qatar.
The country is now importing 40 per cent of our gas needs and this will increase to over 50 per cent in a couple of years' time. This in itself is pushing up UK prices. A further factor is that the price of European gas is index-linked to world oil prices. As oil costs soar, so does the price of gas imported from Europe.
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Nothing said on this forum will ever change anything as long as we are still part of the EU?we need to get control of our untilities back in the control of the communities not large multinationals to make billions of profits.Its the peoples rights to keep warm and have water etc.it should not be in the hands of foreign companies and run by faceless directors.
May I be the first to congratulate the company on their fantastic results. A well run, efficient company which isn't afraid to show it's human face when required. Well done to everyone from the board downwards.
market forces and deregualtion of the gas and electricity markets are no good to me and my family when we are cold and hungry.
Allheart: you're SO outrageous!! Tee hee!!
Does anyone know how our costs compare to Europes ? im sure that this would be a good read ?
Brown :-
Various authorities have been taking a close interest in the energy sector over the past year or two.
There is little real competition in the European energy industry, apart from in the UK.
This is why household gas and electricity in the UK may still be among the cheapest in Europe.
The UK regulator Ofgem also suspects that long-standing contractual arrangements among continental gas firms mean that even when demand is high here, such as in the winter, they are unwilling to turn on the taps and divert extra supplies to the UK.
The watchdog Energywatch has been complaining loudly about this for a long time and wants the regulators both here and abroad to break the apparent link between oil and gas prices.
The MPs on the Business and Enterprise Select Committee have taken up the same theme, demanding urgent action.
chris: "market forces and deregualtion of the gas and electricity markets are no good to me and my family when we are cold and hungry."
The Soviet Union had a heavily state controlled gas and electricity market and people still went cold and hungry.
You can't get away from market forces on this one. Somebody else has got the gas, so if we want it, we have to pay for it. Restructuring the market in the UK will make absolutely no difference to that.
Now that energy prices are set to rise even more in the future now is the time to re-invest into the coal mining industry we have enough energy below our feet to last 300 years I believe.
This country was never held to ransom like we are today by another country all we ever had at one time was Town Gas made from coal, we then only need to rely on oil for petrol etc.
So lets get mining and be self efficient and if more countries did this Russia would soon drop it’s prices but by then it would be to late.
As the saying goes never put your eggs into one basket.
There are failings here on everyones behalf.As the government not been aware that the UK was becoming more dependant on overseas gas as the north sea supply dried up.Could the mandarins not forsee that we would eventually be held to ransom.The energy supply industry have been happy to pipe in overseas gas and pass any increases straight to the consumer as long as they make a profit distributing it, why should they care.The facts are these the government denationalised the energy two decades ago and pay lip service to the industry when these issues arise( crocodile tears for joe public).The energy industry as not invested enough in storage facilities for the gas enabling them to call the bluff of the suppliers when they impose restrictions on supply so that the top price payer only is supplied.
S P In exile, I think you've got a good point about not putting your eggs in one basket.
If I was installing a new cooker or heating system, I'd go for something powered by electricity rather than gas. With gas, you're completely at the mercy of gas prices. With electricty being generated by a number of sources, such as gas, coal, nuclear and various renewables, it's less vulnerable to price spikes in one commodity.
ace:
it wasnt the EU (or even new Lab) who sold of the energy companies to big corporations to milk us dry, it was the conservatives; but dont worry they will be back soon to sell off even more, so more big corporations can make profits, and fund tax cuts for the rich with the money they get for our property
S P In exile,
no we were held to ransom by the miners union instead
selfexiled,
indeed they havnt invested enough, but why would multinational energy companies want to invest, that would cost them money, easier to do the absolute minimum, pass on the cost rises to the customers, who cant stop using gas so just have to pay whatever they are told. if it gets really bad for them they can just pack up head back to france or germany, loaded down with the billions of pounds they have taken off us, after selling off as much land as possible of course
capitilism at it finest, dont you agree?
this is corporate social irresponsibility at its absolutely most obscene.
ANY companys' profit should be tied to the amount it is allowed to charge for services, the number of staff it can make redundant and so on.
its like qantas posting record profits and then making 1500 redundant. its not right.
government should just say no. simple.
trouble is most governments, wherever you are, are in the pockets of big business, too intoxicated by kick-backs and taxes to bother to do anything.
we really need to get a grip that its people that matter, not money.
citycentre, manchester
Isn't it labour who have abolished the 10p tax rate? Not the best move for the poor.
Your posts read like something from the 1960s. We've all moved on. polititcs is different now. Noo Labout have had 11 years to make things better and it didn't work.
Time to bring back the Tories - hopefully the Blessed Margaret is well enough for just one term as PM to sort everything out for us. Hoorah!
S P In exile, Tameside
You are so right.soon europe will be controlled by russia ?just like when russia cut the gas supply off to one of its own neighbours when they didnt tow the line.Europe will be at war sooner than you think with russia.We in britain need to pull out of europe and be self suficiant once again ,in food,water,gas,oil,coal and all the other things we had before we joined the EU.like when we had a fishing/farming industry.before europe dismantled them,for their own greedy lot .and sold to them cheaply by our own politicians.
Councillor Allheart
couldnt comment, dont remember the sixties, wasnt that the golden age people tell us about whenever there is a crime story here?
i am sure the tories will give it a go, but they wont find much left to sell off to fund their tax cuts for the rich this time round