British Gas and E.On have both announced its revenues for the first quarter of this year have been hit, with the energy price cap partly to blame.
Centrica, the owners of British Gas, said the government’s energy price cap has cost the company £70m in the first quarter of 2019. Fellow Big Six supplier E.On also announced a poor performance for the first three months of the year, saying sales have fallen by 6% to £132 million.
British Gas, the biggest energy supplier in the UK, said it had a ‘challenging’ start to the year. As well as the price cap, the firm also pointed to falling natural gas prices and warmer than average temperatures as reasons for their drop in earnings. The supplier also announced it has lost 234,000 domestic customers over the first 4 months of 2019, adding to the 740,000 accounts it lost last year.
However, gross revenues were up 54% in the first four months of the year, and it said it still expects to reach its operating cash flow targets of £1.8 billion to £2 billion in 2019. Centrica managed to save £58 million in the four months to April and plans to save a total of £250 million over the whole year.
“Although operational performance has been largely in line with our plans, external factors have presented challenges for Centrica during the first four months of 2019, in the form of the default tariff cap, warm weather, and falling gas prices,” said Iain Conn, chief executive of Centrica. “We have also experienced extensions to nuclear outages.
“However, we continue to focus on those things we can control and as a result we expect to achieve our 2019 cash flow and net debt targets, while we are making further progress on cost efficiency delivery and on demonstrating margin capture capability. We intend to provide a strategic update regarding our portfolio and prospects at the time of our interim results in July.”
Meanwhile, another Big Six energy supplier, E.On, has also revealed a poor performance for the first four months of 2019. The firm said increased competition and the introduction and subsequent raising of the price cap has led to a £77 million fall in earnings, while UK sales declined by £173 million in the three months to March. However, the German-owned company revealed that overall sales have risen by 5%.
“Aside from the special case of the United Kingdom, our core businesses delivered a solid performance,” said Marc Spieker, chief financial officer of E.On. “We can therefore unequivocally reaffirm our forecast for the 2019 financial year.”
The energy regulator Ofgem introduced the price cap in January this year, setting a limit on the unit price of gas and electricity for customers on default or standard variable tariffs. The government-backed plan was to protect vulnerable and loyal energy consumers being ripped off by their suppliers, but it was raised by over 10% in April, just three months after the cap’s introduction.
