British Gas price rise may be in store

Chief executive talks of price sensitivity as self-imposed tariff freeze ends

Centrica chief executive Iain Conn has warned the firm will “pay attention” to rises in the price of wholesale energy when it resets retail prices after a six-month tariff freeze.

The British Gas owner announced in February this year that it would hold prices steady until August, despite rising wholesale costs causing many competitors to raise their prices. The firm said at the time that it was able to offer the freeze due to internal cost reductions.

But in an interview with the Sunday Times this weekend, Conn said Centrica is “not immune” to the 15 per cent rise in the cost of energy over the past year.

 “We are going to have to pay attention to all of that as we think about pricing,” he said. His words were interpreted by national media as a hint that a price hike for British Gas customers may be around the corner.

Conn’s interview also touched on government plans for an energy retail price cap. Conn took the opportunity to reiterate his opposition to such a step, suggesting that a better solution to the problems posed by expensive standard variable tariffs would be to outlaw contracts with no end date.

He also repeated his defence of British Gas’s profits, insisting that the company’s 4-5 per cent profit margin is not excessive.

Speaking about the future of energy, Conn suggested Centrica’s disposals of its heavy infrastructure and conventional generation fleet mean it is no longer a utility company. Instead he defines it as an “energy and services company” with “all to play for” in a decentralised energy market where “customers are becoming more powerful”.

Conn’s interview comes shortly after announcements from Ofgem revealed that British Gas has had to make two significant settlements with customers to redress unfair treatment and missed appointments. The pay outs total over £10 million.

The firm is also under investigation at the regulator for failing to comply with its licence conditions regarding customer switching and contract termination.