British Gas owner says price hike hugely unlikely for remainder of 2014 as competition heats up in energy industry
Centrica, the parent company of energy giant British Gas, has identified that their prices will likely remain the same for the rest of 2014, despite a recent fall in their profits leading to an intensification of pressure from disgruntled shareholders.
Chief executive of Centrica, Sam Laidlaw, announced that the companyís full-year profits would be smaller than initially forecasted, with the news resulting in its shares tumbling in the early stages of trading today as investors clamoured to minimise their losses.
However, Laidlaw did have some positive news for consumers, indicating that the increased competition in the energy industry would most likely mean that energy prices would be frozen for the remainder of the year. The announcement is most likely a direct response to SSEís recent disclosure that they will hold energy prices for their customers until 2016, in a move that has garnered widespread acclaim for its consumer orientated focus.
The company also highlighted that the average energy bill for their customers was 10% lower than usual last winter due to the weather being warmer than usual. They also highlighted that average consumption of both electricity and gas was down 10% and 25% respectively in the first third of this year, likely due to the same trend.
End of an era?
Laidlaw moved to quell the fears of disgruntled shareholders by highlighting that whilst he expects the companyís profits to drop during the course of 2014, that nevertheless he is convinced that they will be resurgent in 2015 when weather conditions return to ìnormalî and stop playing an inhibiting role on the earnings the company makes.
However, the company also identified that British Gas had lost 180,000 residential accounts over the course of 2014 so far, as competition has heated up in the market and a greater number of consumers have begun to use smaller energy providers.
"Assuming that energy market conditions remain benign, and recognising the competitive conditions in the UK energy supply market, we do not currently expect to change our residential energy prices during 2014," it said.
The UKís major energy companies have come under huge pressure in recent times to reduce the number of price hikes they instigate, following a winter of discontent in which they were all heavily criticised for systematically announcing that they would be raising consumer bills.
This led into an enquiry into the effect that green levies were having on energy prices, with the ëbig sixí arguing that government taxes were forcing them to pass on the costs to consumer bills in order to deal with the increased financial burden of the levy and rising wholesale prices.
This eventually culminated in the government agreeing to roll back the tax, and providers subsequently agreed to lower the severity of their hikes, though the entire affair has provoked the realisation that greater levels of competition are needed in the market in order to ensure that prices are kept competitive.
The government has frequently encouraged people to use comparison sites in order to find the best deal in their area and the most suited energy package for their householdís usage; and British Gasís announcement of the effect this has had on its customer levels suggest that the initiative is beginning to gather momentum.
British Gas announced a 9.2% rise for dual fuel customers last November, by then reduced it to 3.2% from the start of 2014 after their green tax obligations were lowered.
However, it is the smaller energy providers who are now capturing consumer attention as they have begun to supply energy with annual bills under £1,000.
In particular, Ovo Energy and First Utility have been praised for their one year, fixed rate dual fuel tariffs that are estimated to cost low-energy using householdís an annual bill lower than £1,000.
Ovo have also been praised recently for playing a leading role in a new scheme that will see local authorities and community support groups being given access to cheap energy from renewable source owners, such as solar panel and wind farm operators, so that they can then pass on this cheaper energy to low income households in their own energy.
Ovo owner, Stephen Fitzpatrick has also suggested that any shortfall in any provisions would be compensated for by his own company, who would sell their energy at a lower rate for the sake of the initiative.
The move suggests a change in the direction of the wind in the energy market, with consumer power possibly set to be the governing doctrine in the next few years, as scrutiny begins to placed not only on the government and on banks, but the other large institutions that cater for everyday aspects of life.
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