Centrica to cut retail gas bills
December 15, 2006
British Gas owner Centrica plans to cut retail gas prices in spring 2007 after a fall in wholesale costs.
Centrica also said its full-year earnings were on target to be more than many analysts had forecast, despite losing 978,000 accounts this year.
Facing stiff competition, Centrica is restructuring and added that it would cut 1,310 jobs to boost efficiency.
Gas companies have been criticised in recent months for passing on high wholesale prices to consumers.
'Improving margins'
Centrica said that a price cut was on the cards because the "warmest autumn on record in the UK has coincided with the predicted additional supplies of gas being delivered".
It added that the extra supplies and a 15% decline in residential gas demand mean that "although the winter is still ahead of us, margins are improving".
"Against this background we have decided to absorb additional distribution costs of around £100m per annum, and we plan to reduce prices for our customers in the spring," Centrica said.
"We remain resolute in our belief that British Gas must establish reasonable and sustainable profitability to provide long-term energy security of supply while delivering value to the customer," it explained.
Many observers have complained that firms such as Centrica were making large profits at the expense of vulnerable energy consumers who would have been badly affected by high prices over the winter months.
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