'I'm alright Jack!' - British Gas reports £533 million profits (biggest profits this millenium

Roger Carr, Chairman of Centrica, 2nd August: Shareholder value "top of the agenda", but no news on the £92 or 11% price cuts still owed to customers:

Widening margins: operating margin widens from -3.5% this time last year to +15% this year.

Profits up from -£143 million to +£533 million in only half a year - a £676 million boost year-on-year and biggest profits announced by British Gas this millennium.

Wholesale prices plummeted by 56%, but British Gas has only cut its prices by 18% or £207, so people are still overpaying by 11% or £92.

British Gas put prices up by £299 (36%) between 1st January 2006 and 1st January 2007[10], but price cuts this year only add up to £207 (18%) despite a 56% decrease in wholesale energy prices.

Gas market share slips again from 49% at end of 2006 to 46% 6 months later - British Gas lost 201,000 customer accounts in the first six months of 2007 British Gas has seen complaint levels fall by 25% April - June 2007, but it has an estimated 46% of the residential gas market and 22% of the electricity market and, according to energywatch, accounts for 74% of all complaints[5].

British Gas' results today show widening margins, increased profits and a declining market share says uSwitch.com, the independent online price comparison and switching service.

The figures clearly spell out what a difference 2 months[1] of low wholesale prices can make in turning a business around, allowing British Gas to report its biggest profits this millennium - £533 million - up £676 million year-on-year.

Despite this, the report contains a crystal clear message to consumers not to expect any further price cuts from the energy giant.

This will be a blow to customers who have been waiting for a further 11% price cut which would reduce their bills by ?92[3], allowing them to benefit from lower wholesale prices too.

Wholesale prices have plummeted by 56%[4], but British Gas, which put its prices up by ?299 (36%) between January 2006 and January 2007[10], has only cut bills by £207 (18%).

Although British Gas' results demonstrate what a money spinner low wholesale costs have been, the issue is industry-wide and involves all the Big Six suppliers.

There is still £3 billion outstanding to households because of inadequate price cuts made by energy suppliers this year.

Further cuts were predicted following the price war earlier this year, but so far they have failed to materialise.

The last price reductions - EDF Energy's 10% cut on standard gas tariffs and ScottishPower's 11% reduction on gas and 5.5% on electricity - were implemented on 15th June[8].

Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "This report really brings home British Gas' 'I'm alright Jack' attitude.

It has benefitted to the tune of ?676[1] million in part because of lower wholesale prices and in part due to lower operating costs, but Sam Laidlaw, Chief Executive, has made it crystal clear that because of 'uncertainty and current forward prices for the coming winter' it has no intention of cutting prices again.

"Although British Gas has managed to stem customer losses from the first quarter of the year, it remains to be seen whether they will be able to continue this given the Chairman's declaration that shareholder value remains top of Centrica's agenda.

While British Gas puts shareholders first, its customers can only expect to continue to pay over the odds.

Not only are they owed ?92[3] back in price cuts, but less than 1 in 10 (9%) are on the company's cheapest dual fuel plans.

I would remind the industry that competition is not a spectator sport - it will only work if consumers and suppliers get stuck in.".

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