Centrica Warns 25% Increase In Wholesale Gas Yet To Be Passed On To Customers
Centrica, the owner of British Gas has said that wholesale gas prices for winter delivery have increased 25% over recent months but that this has yet to be passed on to customers.
Commodity prices have increased significantly over recent months and Centrica has warned that wholesale gas prices have increased 25% but that this cost had not been passed on to customers.
Centrica also said that profit growth would not be as strong as predicted earlier in the year partly due to the North Sea oil tax which Utility Exchange has discussed recently. Centrica said that profits had also been affected by the warm weather in April. As a result gas consumption was 19% lower than for the same period in 2010.
A Centrica statement said “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”.
Utility Exchange reported last week that Centrica may shut down some of its gas fields because of the new tax on oil and gas. The gas provider faces a tax bill of as much as 81% on some of its oil and gas fields.
Centrica also warned that investment in the UK may be reduced, saying “With the resultant reduced cash flow and increased fiscal uncertainty, we no longer expect to maintain the previously projected high levels of investment in the UK”.
It was at a meeting with the energy select committee that energy bosses said that the new North Sea oil and gas tax could mean that oil and gas fields are closed down early. The new tax would also make these fields difficult to sell on to other developers.
Despite saying that wholesale gas prices had increased by 25% the energy provider didn’t say when and if the cost would be passed on through higher domestic and business gas prices. It therefore remains to be seen whether British Gas will keep prices down during the summer and increase them during the autumn when temperatures start to drop. Either way, it seems certain that domestic and business gas tariffs are set to increase further before the end of the year, so if your business energy contract is due for renewal it would be best to compare business gas prices to ensure you get the best deal.