Scottish and British Gas owner Centrica announced an 80% rise in profits at its residential business yesterday, but said further cuts in domestic bills were far from certain.
The company reported residential operating profits of £299million for the six months to June 30, up from £166million in the same period last year after a cold snap in January and February and falling wholesale costs helped boost performance.
The effect of price rises in 2008 “more than offset” lower consumption per customer during the period as revenue rose 15% to £4.38billion.
Lower wholesale prices hit profits for the whole Centrica business, which were down 5% to £936million.
British Gas Residential increased prices last year as the wholesale cost of gas soared; although the division did not pass on the full rise, leading to a 69% drop in profits.
The firm made a 10% reduction in the standard gas tariff in February and a similar cut in electricity prices in May.
The profit rise at the residential division led to calls for energy firms to make further cuts to their tariffs, but while Centrica said wholesale costs had continued to fall in the period, the firm could not say whether bills would be reduced further.
Chief executive Sam Laidlaw said: “That is obviously a difficult question to answer. There are a number of big variables.”
He said factors such as world prices and the potential for a repeat of the Ukrainian crisis of last winter – where a dispute between it and Russia led to gas supplies for much of Europe being shut off for weeks – would have an impact on which direction bill prices would go.
Nick Campbell, of energy analyst Inenco, said customers should be looking for cuts to their bills of about 10% as demand dropped in the recession causing the biggest energy glut in 20 years.
Robert Hammond, energy expert for Consumer Focus, said: “Any business needs to make a profit but it must also give a fair deal to its customers. Wholesale energy prices have come down and remain low, so we believe that energy firms across the board should be making significant further price cuts.”
Centrica has attempted to reduce its exposure to the volatile wholesale markets by making strategic purchases in the industry.
It has dipped its toe in the nuclear-power sector with a 20% stake in British Energy acquired from France’s EDF for £2.3billion in April.
It has also taken a 29.9% stake in Aberdeen-based Venture Production and has made a hostile takeover bid for the firm.
Buying Venture would enable Centrica to supply 60% of its energy from its own assets and resources.
Mr Laidlaw declined to comment further on its progress in garnering support for its Venture bid, but said the company was in talks regarding other deals in the field of gas production.