Record Profits for British Gas in 2009

British Gas, (a part of Centrica) made record profits in 2009 of nearly £600 million. British Gas has more than half the United Kingdom residential natural gas market with 15 million customers. Executives and spin merchants at British Gas have been looking for ways to justify this level of profits over a year when the whole cost to British Gas of what they resell fell by significantly greater amounts than the price that the customer’s have to pay.

The 2009 profits are the highest recorded by British Gas notwithstanding lower raw material costs and lower consumption as people begin to employ greener energy sources and try to save by using less energy. In these circumstances it is a tribute to British Gas’ ability to exploit its market dominance that profits have risen.

The party line pushed out by British Gas consists of true but irrelevant statements. Yes they have reduced prices on three occasions in 2009, but it is clear that even with reducing prices three times they posted record profits, so obviously the price reductions were not deep enough.

The last price reduction has been recently announced – too late to affect the millions of homes who have had to buy more gas than usual after the United Kingdom’s recent spell of desperately cold weather. Was there any reason with these levels of profits why the rise reduction could not have been announced in November, rather than in late February, except of course the obvious reason?

I do not think that British’s Gas’s profits are fair or low; I suspect that if their books were examined in detail we would find position to be different from the spin. Already the regulator OFGEM claims that the margins of British Gas have actually increased for dual fuel users from £75 a year to £105 a year. British Gas denies any profiteering from falling energy prices but OFGEM do not make these statements without some reason.

Investors in Centrica will be pleased to learn that the profits of British Gas had the effect of increasing Centrica’s share price.

We will soon see the other energy companies posting their profits. It will be interesting to see if their profits are also on the upon in these recessionary times.

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