British Gas feeling chill

ABOUT £700million was wiped from the value of Centrica yesterday as the energy giant reeled from a customer exodus, production woes and a £70million hit from the looming cap on household bills.

Shares in the owner of the UK’s biggest energy supplier, British Gas, fell 13½p to 132¼p, their lowest since March, as it failed to reassure investors despite expecting to achieve its financial targets for this year.

After two price hikes this year, blamed on rising wholesale energy costs, it lost another 372,000 gas and electricity accounts in the four months to the end of October.

Centrica and the other “big six” suppliers have been losing customers to cheaper deals offered by smaller rivals, which have grown their market share to about 30 per cent from 1 per cent six years ago.

Regulator Ofgem’s cap on standard variable rate bills will be set at £1,137 for direct debit customers in the first quarter of next year. This compared with £1,205 paid by a typical British Gas dual fuel customer. It currently has 3.1 million customers on its standard variable tariff.

Centrica also flagged “two unexpected” recent developments which will hurt this year’s financial performance. These were a fall in output at its Spirit Energy exploration and production joint venture, as well as lower nuclear output due to extended inspections and outages at the Hunterston B and Dungeness B power stations.

Chief executive Iain Conn said: “Our efficiency delivery and new customer propositions are helping to offset the effects of strong competition and regulation in energy supply.

“Our financial performance has remained resilient despite weaker than planned volumes from our exploration and production and nuclear activities and cash generation remains strong.”

Centrica announced a further 4,000 job cuts over two years last February and is on track to achieve £200million of annual savings by the end of 2018.