British Gas £299m profits spur demands for price cuts

Despite moderate price cuts earlier this year, profits at British  Gas rose by 80%, drawing widespread criticism.

British Gas owner Centrica announced that profits at its residential business rose 80 per cent in the six months of the year, due to last year's price rises, and a colder than average winter.

Centrica said lower consumption per customer during the period was "more than offset" by the effect of the increase in prices in 2008.

Despite price cuts by 10% in their standard gas tariff in February, and a similar cut in electricity prices in May, the company reported operating profits of £299 million for the six months to June 30, up from £166 million in the same period last year.

The announcement sparked widespread criticism from consumer interest groups and politicians. Speaking to the Daily Telegraph, Dundee East MP Stewart Hosie called British Gas' results “extraordinary”.

“British Gas has obligations to look after its customers as well as its shareholders. In these circumstances, a near doubling of profits does seem excessive. Given the scale of the profits announced today, I hope British Gas might review their pricing structure for next winter,” he said.

Moreover, the announcement came amidst speculation from Centrica CEO Sam Laidlaw that disputes between Russia and Eastern European countries such as the Ukraine could once again result in prices rises later this year.

SuperSwitcher MD Fred Rojahn commented "the fact that British Gas is recording substantial gains despite lower consumption, and the company's price reductions earlier this year clearly shows that consumers are still paying over the odds.

Moreover, given Centrica's investment plans, it's by no means assured that British Gas are going to take the opportunity to reduce prices going forward.

Therefore, consumers are well advised to check if they could benefit from switching to a better deal."