Centrica 'hints' at hikes in gas and power bills
Centrica has sparked fears of higher energy bills after warning it is being squeezed between a 25% hike in gas and power wholesale prices and falling household consumption.
Consumer trend: Warm April and energy efficiencies have cut recent gas and power use
The owner of British Gas, which has around 16m accounts, said rising wholesale prices for next winter were not yet reflected in its household charges.
A Centrica spokesman said it had yet to take a decision about whether to increase tariffs.
Industry regulator Ofgem announced sweeping rule changes in mid-March after finding that gas and electricity firms were profiteering and confusing customers on prices.
It found evidence that they raise prices in line with wholesale prices but delay price falls when wholesale prices come down.
The Big Six suppliers – British Gas, npower, E.On, EDF Energy, Scottish & Southern and Scottish Power – were given eight weeks to engage with the regulator on the rule changes or face action from the Competition Commission.
Comparison website USwitch said Centrica's statement contained 'hints' that consumers could end up seeing further price rises.
Director of consumer policy Ann Robinson said: 'This is the second of the big six suppliers to talk publicly of the impact higher wholesale prices are having on their business. Clearly they are preparing the ground for a second round of price increases and consumers should definitely see this as a warning shot across the bows.'
She urged suppliers to hold fire and protect customers as long as possible because the price of oil is now falling.
Centrica said recent warm weather and energy efficiency improvements had cut gas use by 19% and electricity use by 4% in the first four months of 2011 compared with the year before.
'The 2011 result will be materially influenced by the recovery of higher wholesale prices and other costs in the retail price structure,' it said.
The company added that increased profits from its exploration and production business were expected to more than offset lower profits from consumer-facing operations.
But it repeated its grievance against Chancellor George Osborne's decision to increase the supplementary tax on oil and gas production from 20% to 32% in this year's Budget, saying it would offset the benefit of higher commodity prices.
It has already warned the tax hike could mean that one of three fields in Morecambe Bay may not reopen following maintenance.
Today, Centrica said its 'effective' tax rate for the 2011 financial year would be around 45% - an increase of £300m on its tax bill last year.
'We continue to expect growth in our 2011 group earnings but at a more modest rate than anticipated at the time of our last results announcement as upstream profits have become more highly taxed,' said the firm.
Centrica's share price fell 7.9p to 307.6p in trading today, making it the biggest faller on the FTSE 100.
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