Operating profit in the upstream Centrica Energy business rose by 6 per cent, partly offsetting a 6 per cent decline in British Gas, the UK supply arm. The latter was hit by a 2 per cent drop in household accounts – a trend the company pledged to reverse.
The energy giant played up its role in securing supplies for the UK. It signed £14 billion worth of new gas supply agreements last year, with Cheniere and Qatargas, bringing its total commitments to £60 billion.
Bosses took the opportunity to call for a more constructive debate around energy. That follows Labour leader Ed Miliband’s threat to freeze prices and, more recently, energy secretary Ed Davey suggesting British Gas was too dominant in the gas supply market.
Rick Haythornthwaite, recently appointed chairman, warned the political storm around energy prices was “immensely damaging” to investment.
“Hostilities have got to cease,” he said. “I think the reputation of Britain as a place in which to invest is under threat and the time to correct that is now, not after the 2015 election, by which time the possibility of the lights going out in Britain will be looming much larger. And I don’t see this as the figment of a scaremonger’s imagination.”
Behind the open debate on the cost of living, industry sources have said government put pressure on companies to pledge a price freeze until the next election – a charge the government denies.
Nick Luff, finance director at Centrica, refused to make any such promise, although he noted customers could choose a fixed tariff if they wanted to. “We don’t control international gas prices and the government doesn’t control international gas prices,” he said. “I don’t think it is appropriate to make firm commitments.”
As for the growing threat of a full competition investigation into the sector, Luff pointed out there had been 17 inquiries in the past 12 years, “none of which found anti-competitive behaviour, but all of which have found something that should improve the market”.
Ofgem, the Office of Fair Trading and the Competition and Market Authority will decide whether to order an investigation when they report on a joint market review next month.
Luff was “confident” any kind of inquiry would find the market was competitive. On Centrica’s large market share, he said: “Scale does give us an advantage in terms of cost, which is passed on to the customer, but it does not in any way confer an advantage that does not allow others to compete.”