Centrica to slash gas costs
The owner of British Gas, Centrica, is to cut the gas price in 2007 because of significantly reduced wholesale costs.
The company also reassured investors that its full-year earnings were on target to be better than many analysts have been forecasting, despite the loss of 978,000 accounts in the past 12 months.
Centrica conceded that competition in the cheap utility sector is now extremely fierce and announced a package of 1,310 redundancies that it said would enable it to trim its cost base, savings which could then be passed on to customers.
Despite many energy companies attracting strong criticism this year for raising their gas price, Centrica explained that a cut was likely because the UK had just enjoyed one of the mildest autumns ever recorded. This coincided with predicted additional supplies arriving via pipelines from abroad.
It added that the additional supplies and a 15% decline in residential demand for gas due to the warm weather had also contributed to its decision to cut the gas price.
“Against this background we have decided to absorb additional distribution costs of around £100m a year and we intend to reduce the gas price for our customers in the spring,” said a spokesperson.