One in five households is now in fuel poverty, defined as when 10% of disposable income goes to pay for electricity and heating. Daybreak speaks to Money Saving Expert, Sarah Willingham.
Fury over recent rises in utility bills will be stoked today when the owner of British Gas will reveal profits at its residential arm have risen by a quarter. Daybreak's Michelle Morrison reports:
- The strong performance at British Gas Residential is set to help drive a 13% uplift in underlying earnings at Centrica to £763 million.
- Its upstream division is expected to see a 25% rise in earnings to £662 million, helped by £1.2 billion of acquisitions, which increased its reserves by 38%.
- Centrica claims to have invested £1.80 for every £1 it has earned over the past five years, while higher upstream profits mean its tax bill could top £1 billion for the whole financial year.
Wholesale prices rose a little earlier in the year but are now falling and they are still a long way from their peak in 2008.
We have long questioned whether drops in wholesale costs find their way through to household bills.
Only weeks ago, British Gas was hinting at further bill increases.
With forecasts of rising profits for its domestic supply business, British Gas should at the very least put its customers' minds at rest by stopping this sort of rhetoric.
Tom Pering, an analyst at Inenco, said British Gas would have already bought much of its supplies for this winter in advance, so was unlikely to be in a position to take advantage of the recent easing in prices.
For the coming winter, prices for consumers are unlikely to come down.
And, unfortunately, there will be more bad news for consumers to come, with dwindling Continental Shelf reserves and increasing imports.
British Gas's figures have benefited from weak comparatives with the previous year when unseasonably warm weather hit demand and it delayed passing on rising wholesale costs to customers, pushing the division to make a loss in its second quarter.
When Centrica last updated the market, in May, it warned its energy costs were continuing to rise, with wholesale gas prices 15% higher for the next winter and other costs set to add £50 to the cost of supplying the average household this year.
Although wholesale prices are understood to have reduced slightly in recent months, they are unlikely to be passed on to consumers this year.
- The British Gas profits hike is likely to anger struggling consumers - after the average dual fuel bill rose to £1,310 a year - more than £200 higher than two years ago.
- One in five households is now in fuel poverty, defined as when 10% of disposable income goes to pay for electricity and heating.
- Energy companies have been accused of quickly passing on rising wholesale costs to consumers but being slow to drop prices when they fall.
- Centrica's British Gas Residential is expected to post a 26% hike in profits to £352 million in the first half of 2012.
- British Gas, which has 16 million customer accounts, dropped its standard electricity prices by 5% in January but they are still higher than a year ago after a 16% rise in August, when gas bills also went up by 18%.
- The rise in profits means that British Gas Residential made nearly £2 million of profit a day, or some £3.70 per household per month.
Fury over recent rises in utility bills will be stoked today when the owner of British Gas is set to reveal that profits at its residential arm rose by a quarter.
Centrica's British Gas Residential is expected to post a 26% hike in profits to £352 million in the first half of 2012 as the UK's biggest energy supplier benefited from the cool start to summer and higher prices.