As Centrica, British Gas’ parent company, announced that it is all set to register profits of £1.4 billion this year, news of 6% rise in gas prices came as a jolt to the UK households, as British Gas became the latest utility giant to hike its tariffs.
Analysts expect a £575 million of pre-tax profit from its British Gas residential arm after gas consumption for the first 10 months of 2012 rose 9% because of colder than normal weather. Centrica’s UK residential services business, which involves fixing people’s boilers, is expected to deliver double-digit profit growth.
Colder than normal weather prompted Britons to use boilers earlier this year, driving a 9% rise in gas consumption over the past 10 months. Centrica said that group earnings for 2012 would grow in line with market expectations of a 15% increase in adjusted operating profit, to £2.79bn, which is likely to see a 35% jump in profits to £1bn in its ‘upstream’ division, which produces oil and gas.
While it forecasts profits, Centrica claims that the factors leading to the gas price hikes are outside its control including “higher costs to help upgrade the UK’s gas and electricity grids and to deliver the UK’s carbon reduction targets”, which had added about £50 to an average household bill.
The British Gas share price fell 0.95% to 1007.84 after the announcement of the gas price hike.
British Gas’s price hike comes in addition to the spate of tariff rises among the UK’s biggest power firms. SSE was the first to increase prices, hiking the energy bills by an average of 9% in mid-October,which is affecting about five million electricity customers and 3.4 million gas customers.
Npower is expected to announce its gas price hike on November 26, while EDF and Scottish Power are slated to raise energy bills in December. German-owned E.ON is planning to announce an 11% tariff rise next month.