In the first half of 2010, profits have almost doubled for British Gas. The company benefitted from the coldest winter experienced in the UK in the last 30 years. Despite the soar in profits, British Gas is unlikely to accede to customers’ demands to cut its prices.

Analysts predict that the gas and electricity supplier will see a 95 per cent increase in profits to reach GBP583 million (*S$1231.64 million) this year as compared to GBP299 million the previous year. Gas consumption expanded by more than 10 per cent in the first 6 months of 2010 as a result of the cold winter. British Gas, which offers the cheapest supplies of gas and electricity, was the first to cut prices in February.

An additional 200,000 customer accounts were added in the past year, increasing its customer base to almost 16 million, making it the fastest growth in a decade. This is expected to boost company profits this year.   

The increase in the profits of British Gas has fuelled large gains for its parent company, Centrica.  British Gas said that the profits were required to fund Centrica’s GBP15 billion investments in new sources of energy production and infrastructure.

Britain’s electricity and gas regulator, Ofgem called for greater transparency among Britain’s major energy suppliers. 

Utility bills peaked after oil prices hit a record high of USD147 (*S$200.89) a barrel last summer. While wholesale prices have almost halved since last year, retail prices have only decreased by 10 per cent.

The low wholesale prices have boosted the profit margins of energy companies however prices of gas and electricity have only decreased marginally. Consumers are worried that small rises in wholesale prices will be used to justify price hikes during winter.

*Exchange rate correct as at 26 July 2010