‘I’m alright Jack!’ – British Gas reports £533 million profits

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 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, allowing them to benefit from lower wholesale prices too. Wholesale prices have plummeted by 56%, but British Gas, which put its prices up by £299 (36%) between January 2006 and January 2007, 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.

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 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 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.”