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Posted by on Feb 21, 2014

Centrica chief Sam Laidlaw says household fuel bills to drop

Centrica chief Sam Laidlaw says household fuel bills to drop

Centrica has said household fuel bills for the past months could be as much as 10 per cent lower than normal because of mild winter weather – a development that may help to alleviate public anger over rising prices from the Big Six energy suppliers. Sam Laidlaw, chief executive, said his expectation was that average winter bills for the group’s British Gas customers would be down 8-10 per cent year on year, thanks to a combination of the weather, greater energy efficiency and a reduction in planned environmental levies. However, he added that it was “too early” to say whether bills for the whole year would be lower. Mr Laidlaw also held out the prospect of a lower wholesale gas price, which is a key component of household bills. He said the supply picture was brightening thanks to new export flows expected from Australia, the US and east Africa in the coming years.

“Unless we have some Middle East oil price shock, the outlook [for gas prices] is more positive than it has been,” he said, referring to the link between prices of gas and oil.

Lower bills are likely to ease some of the political pressure that has been brought to bear on Centrica and the other major energy suppliers since they announced a round of inflation-busting price increases last autumn.

Their decision – which came just weeks after Ed Miliband, the Labour leader, had promised to freeze energy prices if elected in 2015 – propelled the Big Six into the heart of the cost of living debate.

They were able to scale back some of their price rises after the coalition government amended environmental levies that affect the cost of energy supply.

Mr Laidlaw was speaking as Centrica reported a 6 per cent fall in annual profit at British Gas’s residential business to £571m. The group said operating profit fell nearly a fifth in the second half of the year because of the warm winter weather.

But the fall in profits did not silence Centrica’s critics. On Thursday, Caroline Flint, shadow energy secretary, said British Gas and its peers were generating profits “on the back of spiralling bills for hard-pressed consumers”.

Mr Laidlaw warned that interventions by Mr Miliband and others had led to a breakdown of the political consensus on energy policy, which had in turn led to an “investment hiatus”. This, he argued, threatened to undermine the UK’s power generating capacity later in the decade.

Rick Haythornthwaite, Centrica’s chairman, said “hostilities have got to cease” between politicians and the industry, and called for a consensus to be re-established ahead of next year’s election. By 2015, he claimed, “the possibility of the lights going out in Britain will be looming much larger”.

Fonte: http: ft.com

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