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Centrica profit down in 2013 on weak performance from British Gas

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Profits slumped last year for Centrica, due to a weaker performance from it’s businesses British Gas and Direct Energy.

Group operating profit dropped by 2% to £2.695bn ($4.48bn, €3.27bn) for the year, after exceptional charges of £667m it was a 29% decline on 2012.

Due to a mild end to the year and higher costs, British Gas’ profit was down 6% on it’s household energy supply, with business supply profits dropping 19%.

“In the UK, the operating environment for our downstream energy supply businesses was unprecedented,” said Centrica’s report.

“Affordability has been a key concern for both residential and business customers, amplified by media and political debate ahead of the 2015 election.”

Large energy firms such as Centrica have been heavily criticised with consumer bills shooting up, together with families struggling due to benefit cuts and low wages.

The government made promises to shift green levies onto general taxation, with several energy companies agreeing to drop energy prices.

Labour leader Ed Miliband said if he is elected as prime minister in 2015 he will force energy firms to freeze prices for almost two years.

However, the industry says they have to raise prices to pay for volatile costs and investment needed to pay for maintenance and improvements to the UK’s energy infrastructure.

UK Energy secretary Ed Davey wrote to Ofgem to urge an investigation into the Big Six over their bumper profits and increasing energy bills. He singled out British Gas in particular.

“[British Gas] tends to charge one of the highest prices over the past three years, and has been on average the most profitable,” said Davey in a letter to Ofgem, the energy watchdog.

“Clearly you will wish to consider whether this is prima facie evidence of an issue in the market and so whether it merits a market investigation reference with the whole gamut of potential remedies that could follow including a break-up of any companies found to have monopoly power to the detriment of the consumer.

“Alternatively you may of course conclude that no action is needed or potentially some intermediate measure which can be taken by the sector regulator.”

 

 

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