British Gas profits slammed by consumer groups

25th February 2010

British Gas has been slammed by the UK's leading consumer watchdog after it announced a 58% leap in profits.

The country's biggest energy supplier made £595m of operating profits last year, a jump from £376m the year before, thanks to a substantial fall in wholesale energy costs.

However, the savings in the cost of wholesale gas were not passed onto customers who saw astronomical bills during the winter freeze. Despite the cold weather, gas consumption dropped by 7% as many households turned down their thermostats to save money and installed more energy-efficient boilers.

Consumer Focus, the Government-funded watchdog, urged all suppliers to cut their bills immediately and for the Competition Commission to investigate the market.

Ofgem estimates that energy companies are now making £105 profit from every customer each year as falling wholesale costs are not passed on.

Philip Cullum, deputy chief executive at Consumer Focus said: "Energy companies have no excuses for not cutting bills for their customers. It is clear the problems in the energy market are profound and that it requires fundamental reform.

"For consumers, a combination of high prices and cold weather has exacted a heavy cost. Energy companies have taken advantage this winter, while more than six million UK households live in fuel poverty and face a desperate struggle to keep warm."

The energy regulator, Ofgem, estimates that energy companies are now making £105 profit from every customer each year because they have failed to pass on falling wholesale costs.

Which? chief executive, Peter Vicary-Smith said: "When consumers are told that wholesale prices are falling and energy companies are announcing bumper profits, they're going to question why their fuel bills aren't being reduced. Energy suppliers must be upfront about how they calculate bills, otherwise it's hard not to conclude consumers are being taken for a very expensive ride."