British Gas proprietor Centrica hit by vitality worth cap

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British Gas proprietor Centrica has blamed an enormous loss in 2019 on the vitality worth cap and falling fuel costs.

Centrica made a lack of £849m within the 12 months ended 31 December in contrast with a £987m revenue the 12 months earlier than.

That despatched the share worth tumbling by 15% in early buying and selling on Thursday.

Chief government Iain Conn mentioned: “It’s true that 2019 was going to be a difficult year, with the first year of the implementation of the price cap, and it did hit us by £300m”.

“But we also had the falling price of gas, which affected our North Sea businesses, which we’re selling,” Mr Conn informed the BBC Today programme.

However, he added that its buyer divisions “did well” when it comes to underlying earnings.

The worth cap on electrical energy and fuel payments got here into impact in January 2019 and was a flagship coverage of former Prime Minister Theresa May to finish what she known as “rip-off” costs.

Last week, vitality regulator Ofgem informed suppliers to chop common commonplace payments and pre-pay payments by 1.4% from 1 April as wholesale costs had fallen between August 2019 and January 2020.

Centrica, which has a 20% stake in Britain’s nuclear energy stations, added that outages at two nuclear vegetation final 12 months had additionally hit earnings.

Centrica woes

Julie Palmer, companion at consultants Begbies Traynor mentioned: “These newest outcomes counsel Centrica is operating out of fuel, with the federal government’s worth cap on vitality payments, sturdy competitors from start-ups and the seek for a brand new chief government hampering the agency’s efficiency.

“The energy supplier has had to cut tariffs for millions of its customers, leading to thousands of job losses as the company aims to reduce costs and improve its profitability.”

She mentioned that traders will wish to know the long-term technique because the UK goals for internet zero carbon emissions by 2050. “With Centrica’s stakes in numerous fossil fuel businesses, it will need to reshape its portfolio to get itself back on its feet,” Ms Palmer added.

Customers have been dropping away from the six greatest suppliers on the UK vitality market, and consultants hailed 2019 because the 12 months that the group’s stranglehold in the marketplace was lastly damaged for good.

Centrica’s rival SSE was purchased by one of many smaller challengers, Ovo Energy, which solely entered the market a decade in the past. Ovo and different challengers spent the second half of the final decade stealing prospects away from the larger rivals, chopping Centrica’s market share from 24% when Mr Conn took over, to 19% in the direction of the tip of final 12 months, in response to figures from Ofgem.

“British Gas is really struggling with the onslaught from small suppliers, the price cap, and falling natural gas prices hitting them hard,” mentioned Mark Todd, co-founder of Energyhelpline.