Energy giant Centrica said yesterday extra profits earned during the cold snap at the start of the year would be used to hold off price rises “for as long as possible”.
The Scottish Gas owner said household gas consumption in the opening months of 2013 was up by nearly a fifth on the same period last year, but after raising its prices by 6% in December the utility said it would not pocket the extra earnings.
In a trading update, Centrica said its residential business was on course to deliver full-year profits in line with expectations of £602million – slightly down on last year due to higher costs.
It said: “Against a background of sustained cold weather and periods of higher commodity prices, Centrica has performed well in the year to date.”
The company said UK customers had increased by 28,000 over the first four months of the year due to “a competitive pricing position and continued good levels of customer service”, and revealed the major impact of freezing conditions on its revenues at the start of 2013.
“As a result of the unusual period of extended cold weather, average residential gas consumption was 18% higher in the first four months of 2013 than in the same period in 2012, and average residential electricity consumption was 3% higher,” it said.
“Recognising the economic pressures facing many of our customers, the board has determined that any benefit arising from the exceptionally cold weather will be used to maintain our price competitiveness.”
A spokesman added: “We will use that to effectively hold prices for as long as possible.”
Centrica’s chairman Sir Roger Carr was forced to admit the company had an “image problem” as he faced investors at the firm’s annual meeting, however.
The company was accused by small shareholder John Farmer of being “one of an evil big six (energy firms) out to exploit”.
Sir Roger said: “We have an image problem, we have a media problem and sometimes we have a political problem.
“But the facts are that we are doing good for this country.”
Another shareholder attacked chief executive Sam Laidlaw’s pay, which he said worked out at £36,000 a week.
He asked: “How can you tell us and everybody else throughout the country that one man is worth £36,000 after tax and does not play in the Premier League?”
But Sir Roger defended Mr Laidlaw as “absolutely outstanding” and said “everybody operates in a market of talent”.
Meanwhile, Centrica said its Aberdeen-based upstream business was on course to increase output by more than 10% this year.
The firm said yesterday a number of new projects would achieve first oil in 2013, taking the division’s annual production up to 75million barrels of oil equivalent (boe) from 67million boe last year.
Centrica said highlights of the first quarter included first gas at York and Rhyl in the North Sea, adding that approved projects at Kew, Grove, Valemon and Cygnus remained on track to bring 86million boe into production for the firm over the next three years.
Cygnus in particular is expected to be a key discovery for the business – the £1.4billion development is the largest gas find in the southern North Sea for 25 years and holds 635billion cubic feet of proved and probable reserves. First gas is expected at the end of 2015.
Paul de Leeuw, director of strategy and analysis at Centrica in Aberdeen, described the first quarter as a “great start” for the upstream oil and gas business.
He said that Centrica had also enjoyed drilling success in Norway and the east Irish Sea, at its Rodriguez and Whitehaven prospects respectively.
