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British Gas comes under fire for ‘ripping off’ customers

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26/07/2012
British gas is being urged to cut prices after it revealed a 23% increase in year-on-year profits with operating profits up £64m in the first half of this year compared to the same time last year.

As Britain’s largest energy supplier, consumer groups are calling on the supplier to share its profits in the form of price freezes or rate cuts, to help households that are struggling with rising costs of energy bills.

The supplier has reported operating profits up from £281 million for H1 last year to £345 million for H1 this year.

British Gas has said that the profits are due to ‘Higher UK residential energy consumption, compared to the exceptionally mild weather and unusually low levels of profitability in the first half last year” contributed to the strong performance.’

The average household energy bill for a British Gas customer was £1,100 in January 2011 – today it is £1,260, £160 or 14.5% higher.

British Gas increased its prices in December 2010 and August 2011 by 24.9% or £256 in total – it cut them by 2% or £26 in January this year.

Ann Robinson, director of consumer policy at uSwitch.com, said: “These soaring profits show that British Gas could and should cut its prices ahead of winter. This would go some way to acknowledging the pressure customers are under as they struggle to afford their household bills.

“It will also ensure that they too get to share the benefits of lower wholesale prices. With over eight in ten households having cut down or rationed their energy use last winter because of cost, any reduction would be welcomed.

“As Britain’s largest supplier, if British Gas cuts its prices other suppliers will be under pressure to follow suit. A second wave of price cuts this year will not only help customers to better afford their bills, but would also be an olive branch signalling the industry’s true commitment to rebuilding trust and confidence with its customers.

“But as we inch towards winter, I would also remind consumers that they too can take steps to cut the cost of their energy. There is currently just under £300 difference between the most expensive and the cheapest energy tariff on the market.

“This is a substantial saving that can be boosted still further by ensuring that your home is energy efficient too. These two steps offer us all the best protection against the high cost of household energy today.”

Responding to British Gas’s profit figures, Audrey Gallacher, director of energy at Consumer Focus, said: “Hard pressed consumers will be shocked to see such a big rise in profits when British Gas has been warning of the need for price increases.

“Our economy needs profitable companies, but energy is an essential service we all need to heat our homes and keep the lights on. So customers need to know they are being charged a fair price through a competitive and transparent market.

“Customers need guarantees that falls in wholesale prices will be passed on as fairly and quickly as rises in wholesale prices. They also need commitments from British Gas in the light of these profit figures that there will be no customer price rises this year!”

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