Centrica owned energy giant British Gas reported a 31% increase in 2015, bringing the total to £574 million for the year, compared to £439 in 2014.
The energy provider has come under fire for making such a large increase in profit at a time when the energy industry as a whole is being scrutinised following falling wholesale costs which, many argue, are not being sufficiently passed down to customers.
Each of the Big Six energy companies have dropped their gas prices on their standard tariffs by 5-5.4% since the beginning of this year, but many have argued that they have not gone far enough, as wholesale prices for gas have fallen by as much as 57% since the beginning of 2015.
The chief executive of British Gas’ parent company, Centrica, argued that the rise in profits was “not because of falling commodity prices” but was rather down to differences in “weather and consumption” in 2015 when compared to 2014.
He said: “we saw a very mild 2014 and we saw a more normal 2015 and therefore the amount of energy that our customers used went up and therefore the actual total profits went up.”
He also cited the “phasing of cost programs” over the year as helping to increase profits, maintaining that they “had been able to pass falling commodity prices onto the customers.”
Over the past year, British Gas has cut their prices three times, amounting to a total savings of £100 per dual fuel customer, according to their figures.
However, as many commentators have been quick to point out, their standard dual fuel tariff is still a lot more expensive than the cheapest plans they offer. This is the case across the energy industry where the difference between a supplier’s standard tariff and their cheapest plan can get up to £450.
Campaigners at Fuel Poverty Action have launched a scathing indictment of British Gas’s profit increase.
One campaigner said: “it is absolutely sickening that British Gas has made bumper profits in a year when there were more winter deaths than at any time this century. We have seen British Gas mercilessly hound hard-up customers even when bills are in dispute.”
Fuel Poverty Action also turned their strong criticism on the government, saying that “despite all the headlines, the power of the Big Six remains absolute, thanks to a government that is happy to leave its citizens to die in cold homes”, citing “cuts to insulation programs and renewable energy” as examples of problematic policies.
Despite British Gas’s profits going up last year, Centrica’s profits actually went down by 12%, largely down to reductions in the value of its portfolio of power stations and oil and gas assets which, in total, went down by £2.4 billion.
Centrica claimed that despite a drop in profits, they were largely performing well given the circumstances and indeed, after shares falling by a third last year, they experienced a mild increase this week.
“Centrica has delivered a resilient financial performance, with a solid 2015 adjusted earnings despite the challenge of falling wholesale oil and gas prices” said Iain Conn.
