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British Gas owner Centrica sees half-year profits rise British Gas owner Centrica in energy price rise warning
(about 2 hours later)
British Gas owner Centrica has reported a rise in half-year profits, after the unusually cold winter boosted gas consumption. British Gas owner Centrica has warned that UK domestic energy bills could go up again this winter, as it reported a rise in half year profits.
Finance director Nick Luff said the "upward pressure on costs" continued.
"We will keep prices as low as we can for as long as we can", he said. "If prices do have to go up, we will delay it for as long as possible."
The warning came as British Gas' residential arm saw profits rise 3% to £356m, up from £345m a year earlier.
Centrica's adjusted operating profit rose 9% to £1.58bn for the six months to 30 June, up from £1.45bn for the same period in 2012.Centrica's adjusted operating profit rose 9% to £1.58bn for the six months to 30 June, up from £1.45bn for the same period in 2012.
British Gas' residential arm saw profits rise 3% to £356m, up from £345m a year earlier. The company attracted criticism after raising energy prices for UK households by 6% in November 2012.
It attracted criticism after raising energy prices by 6% in November 2012. This pushed its average dual fuel bill up from £1,260 to £1,340 a year, according to energy comparison site Uswitch.
Centrica said "significantly higher environmental and commodity costs" had affected British Gas Residential's operating profits, despite gas consumption rising 13% compared with the same period last year. Speaking to the BBC, energy minister Michael Fallon called on the big energy companies to show "some restraint" in their consumer pricing after "big increases in bills over the last couple of winters".
Centrica chief executive Sam Laidlaw said: "With our customers using more gas to stay warm during the unusually cold winter, we're doing everything we can to help them keep their energy costs under control and make bills simpler and clearer." Green energy
British Gas has introduce a Tariff Checker to help its customers work out if they are on the cheapest tariff, but rising profits are still likely to attract criticism from consumer groups. Centrica said the cost of complying with the government-imposed Energy Company Obligation (ECO), aimed at helping low-income households with their heating bills and reducing carbon emissions through insulation, would be £1.4bn by the time the scheme ends in 2015.
Centrica said it expected British Gas Residential's full-year operating profits to be "broadly in line" with 2012's figure of £606m. It said these costs, coupled with rising transmission costs and volatile wholesale prices, had dented British Gas Residential's operating profits, despite gas consumption rising 13% compared with the same period last year.
The company said the cost of complying with the government-imposed Energy Company Obligation (ECO), aimed at helping low-income households with their heating bills and reducing carbon emissions through insulation, would be £1.4bn by the time the scheme ends in 2015. But it still expects British Gas Residential's full-year operating profits to be "broadly in line" with 2012's figure of £606m.
Acquisitions British Gas has introduced a Tariff Checker to help its customers work out if they are on the cheapest tariff, but rising profits are still likely to attract criticism from consumer groups if household bills continue to rise.
For example, Tom Lyon, energy expert at Uswitch.com, said: "We would urge suppliers to reduce the pressure on consumers by guaranteeing that they won't hike prices this winter.
"Last winter, almost seven in ten households (69%) went without heating at some point to keep their energy costs down."
Shale gas
On Tuesday, Centrica announced that it had bought the energy marketing business of Hess Corporation in a $1bn (£657m) deal that makes its Direct Energy subsidiary the largest business-to-business gas supplier in the eastern United States.On Tuesday, Centrica announced that it had bought the energy marketing business of Hess Corporation in a $1bn (£657m) deal that makes its Direct Energy subsidiary the largest business-to-business gas supplier in the eastern United States.
In June, Centrica also spent £44m on a 25% stake in a shale gas exploration licence in Bowland, Lancashire, owned by Cuadrilla Resources and AJ Lucas.In June, Centrica also spent £44m on a 25% stake in a shale gas exploration licence in Bowland, Lancashire, owned by Cuadrilla Resources and AJ Lucas.
The company has agreed to contribute a further £56m towards future exploration and appraisal costs associated with the project.The company has agreed to contribute a further £56m towards future exploration and appraisal costs associated with the project.
Centrica's results come a day after French energy company EDF reported UK pre-tax profits of £903m and said it was pulling out of the US nuclear power market because of the widespread availability of shale gas. But shale gas is proving to be a controversial topic in the UK, with public protests over its potential to cause pollution and environmental damage.
Speaking to BBC Radio 4's Today programme, energy expert Cornelia Meyer, who also sits on the board of Shale Energy plc, said: "Shale producers will have to do a lot of work in educating the public, but in the end we need shale gas....to be energy secure."
Centrica's results come a day after French energy company EDF reported UK pre-tax profits of £903m and said it was pulling out of the US nuclear power market because of the widespread availability of shale gas in the country.
The shale gas glut has caused gas prices to collapse in the US, whereas costs in Europe have been rising, largely thanks to the move towards lower-carbon energy sources.