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British Gas under fire for raking in 50 profit per household just months after hiking bills… and the boss looks forward to walking away with 10m
Company profits for 2012 have soared to 606million But price rises for 12million customers could come as early as next winterShadow Energy Secretary says market too dominated by 'big six' firmsCaroline Flint called for tough regulation so public don't feel 'manipulated'Campaigners say consumers feel 'resentment and dread' as bills still rise
will be used to help fund a 10million package in pay, shares and pension pot for departing boss Phil Bentley, who will leave the business in June.
After making so much money last year MPs and consumer groups have called on the energy giant to cut bills for its 8.4million customers.
They imposed a six per cent increase last November, which added 80 to the annual average gas and electricity bill.
But British Gas has refused to rule out putting prices up again next winter, filling consumers with 'resentment and dread', critics have said.
This morning the company revealed its profits for 2012 soared by 11 per cent on the previous year to 606million, while owner Centrica did even better, with a 15 per cent gain to roughly 2.8billion.
Len McCluskey, Unite general secretary, said: 'British Gas' owner Centrica is making 50 per household in this country – that is staggering.
'These profits will anger a growing number of families who are struggling to pay the bills.
'The price increases in November caused hardship for customers while British Gas bosses boosted their profits and their own bonuses in the process.'
Audrey Gallacher, Director of Energy
at campaign group Consumer Focus, said: 'This announcement comes after
more price rises last year, record numbers in fuel poverty and not long
after the energy regulator warned of higher still energy prices for the
‘We should not be surprised if
consumers regard these results, and the warning of price rises to come,
with a mix of resentment and dread'.
Centrica’s top five executives will also collect a shares windfall predicted to top 10million.
Company chiefs will be given millions of shares under a long-term bonus scheme set up three years ago, which is linked to the firm’s performance.
Bosses will benefit from the fact that they will not receive the shares until after the end of the current tax year.
As a result, they will cash in on Chancellor George Osborne’s cut in the top rate of tax from 50 per cent to 45 per cent.
Sharp rise: Total profits at British Gas have soared by 11% in a year after imposing huge price increases
Graph: British Gas have released this chart today explaining its costs but consumers are finding its increasing profits hard to swallow
Shadow Energy Secretary Caroline Flint
said of the anticipated price rise: 'Only a few months ago they [British
Gas] decided to put prices up, event though their profits have gone up
extremely well in the last year.'
Ms Flint told BBC Radio 4's Today programme it was 'interesting' that shares would not be paid out to bosses until after April 1 and the introduction of the Mr Osborne's tax cut.
She said British Gas was quick to put its prices up when wholesale gas prices increased, but when wholesale costs go down it is not reflected in customers' bills.
'We don't see the reverse happening,' she said, and called for the introduction of a tough regulator to ensure that savings in wholesale gas prices were passed on to customers.
'It's about fair prices and the public not feeling manipulated,' said Ms Flint, adding that the market was 'not as competitive as it should be'.
'So much energy is controlled by the big six, small companies can't come in,' she said.
'It's a closed market, that is the problem.'
Alex Brummer, the Daily Mail's City Editor, told the programme the staggering payouts to Centrica bosses were not acceptable for what is essentially a utility firm.
The UK’s biggest energy supplier put up tariffs six per cent in the teeth of the winter chill, pushing up bills by 80 to an average 1,350 a year.
Directors from the company appeared on television this morning to defend the results.
Chris Jansen, managing director of services and commercial at Centrica, said a colder winter last year contributed to the rise in profits.
'I completely understand our profits announced today will create a reaction with customers,' he told Daybreak.
'I think it’s important to remember that in 2011 it was a very, very mild winter … so the country used a lot less gas, and actually our profits in 2011 were 20 per cent down on 2010.'
Asked whether customers would face further price increases, Mr Jansen replied: 'It’s impossible for me to say that, that’s like looking at a crystal ball.
'The general trend for energy prices are prices are increasing. All we say to customers is let’s do what we can to control energy bills.
'Prices might be going up but bills don’t need to if we control our energy use.'
Another price increase: British Gas is today expected to warn of another punishing energy price hike despite a massive surge in profits
Regulation: Tough regulation is needed to ensure savings on wholesale gas prices are passed on to the customer, said shadow Energy Secretary Caroline Flint
THIS IS MONEY TIPS: HOW TO CUT YOUR ENERGY BILLS
The winter price hikes by the 'Big Six' energy firms provide an opportunity to take control of your bills and save, explains Simon Lambert.
An online comparison is the best way to do this and you can find the cheapest energy supplier for you by using our fuel bills switching service, powered by Energy Helpline.
The biggest savings of about 300 a year can be achieved by those who have never switched. Most others can also save on bills.
Simply enter your postcode into the box below and allow it to do the work for you.
Five tricks to remember
1. Take regular meter readings rather than relying on an estimate. This keeps you as close as possible to an accurate bill
2. Move to online bills. This saves up to 10%.
3. Monthly direct debit payments could save you 5-10%
4. Dual fuel (gas and electricity from the same supplier) is usually but not always the cheapest option. Compare both this and separate gas and electricity.
5. Knowing how much you pay now or how much energy you use delivers the best comparison. Get your most recent bill and use the figures.
This is Money is the Mail Online's award-winning money section
Ian Peters, managing director of residential energy for British Gas, told the BBC: 'If I look into the future we have no plans to put prices up even higher, the gas prices are relatively calm.'
Asked on BBC Breakfast how long into the future – and if the firm was committing to not putting prices up – he said: 'I can’t do that because the gas market is volatile.
'But right now, as I say, it is very early in the year, we work in a very competitive market and it is not in our interest or our customers’ to put prices up. So we will do everything we can not to do that.
'What I want to say is that we will move heaven and earth to keep our customers’ bills down. We have the lowest bills in the industry.' Alastair Buchanan, head of energy regulator Ofgem, has warned of an energy crisis as Britain becomes more reliant on expensive imported gas.
Price rises will also go to subsidies for wind farms, nuclear power stations and free insulation for the vulnerable.
According to Centrica’s accounts, its chief executive Sam Laidlaw, finance chief Nick Luff, head of energy Mark Hanafin and the head of its US arm, Chris Weston, will gain from the shares bonanza.
Company sources said the shares are part of a long-term incentive, not a windfall, while the date of the hand-over was decided long before the 50 per cent tax rate was scrapped.
Centrica has tried to pre-empt a furore over pay with a study on its positive impact.
Mr Laidlaw said: ‘At a time of uncertain economic prospects, our activities across the UK are even more important to secure employment, put the supply chain to work and contribute our fair share of tax.’
The company employs some 33,000 people in the country, while its tax bill is expected to be around 1.1billion in 2012. Unlike many rivals, it is wholly British and pays its tax here.
Richard Lloyd, executive director at consumer champion, Which, said: ‘People are bound to question whether they’re paying a fair price for energy when they see big profits announcements.
'Centrica’s analysis won’t change that view as record-high bills land on millions of doormats.'