Profits at Britain’s biggest energy supplier more than doubled in the first half of the year as customers used more energy in the colder weather.
Centrica said that adjusted operating profits for its British Gas household and small business supply division jumped to £172 million, from £78 million a year earlier, despite the loss of 114,000 households.
That helped Centrica to keep group adjusted operating profits broadly flat, down 1 per cent at £262 million, despite an £87 million negative impact from Covid-19 and strike action among British Gas Services engineers.
Centrica also includes an oil and gas business, Spirit Energy, and owns a 20 per cent stake in Britain’s nuclear plants. It had been looking to sell both but has been struggling to find buyers and the nuclear stake has been on the market since 2018 amid safety outages at the plants. Centrica said it had been “re-considering whether nuclear can play a role for Centrica in the future” and “may decide to retain our 20 per cent interest”.
It said the sale of Spirit Energy had been affected by the pandemic uncertainty and by its joint venture structure and it had received offers for the entire business that were not “compelling” so it was now pursuing “alternative sale options”.
British Gas has been losing customers for a decade because of competition from cheaper rivals and it now supplies energy to about 6.8 million households. The loss of 114,000 households in the first half of the year came despite British Gas acquiring 89,000 new households from the small suppliers Simplicity Energy and Nabuh Energy.
The company blamed the continued customer exodus on Ofgem’s announcement in February that it was raising the energy price cap on standard tariffs by £96, which “resulted in increased levels of market switching across March and April”. It said that some companies were also offering at “fiercely competitive” loss-making prices via switching websites.
Chris O’Shea, Centrica chief executive, said that just under £50 million of the increase to British Gas profits related to “exceptionally cold” weather compared with “exceptionally warm” weather in the first half of 2020. The supply profits also benefited from a £20 million boost from a one-off increase to the level of the energy price cap after Centrica won a legal challenge complaining that it had been set too low when it was introduced in 2019.
The figures also include small business customers and there was a further £20 million boost from small business usage recovering from the worst impacts of the pandemic last year.