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CENTRICA DEFENDS SOARING FUEL BILLS

Centrica wants to up prices even though domestic bills have soared through the roof

Tuesday May 13,2008

By Andrew Johnson

BRITISH GAS-OWNER Centrica yesterday said it was “crucial” to increase profits even as domestic fuel bills soared.

Chief executive Sam Laidlaw told investors at the annual meeting in London the company also needed to invest in new oil and gas production as well as other energy sources, such as wind and nuclear power.

Chairman Roger Carr hinted the group could yet become involved in bidding for nuclear energy producer British Energy.

He was speaking as the company said half-year profits would be “materially lower” than last year’s £1.12billion, despite energy bills rising 15 per cent in January. This was due to higher gas prices, higher taxes and a hit of up to £400million on historic industrial contracts, fixed when prices were much lower. The shares rose 7fp to 295bp.

Laidlaw warned fuel bills were likely to remain high. “UK gas and power prices are subject to a cocktail of pressures and influences from all corners of the globe,” he said.

High oil prices, strong Far Eastern gas demand and future carbon emission regulations will conspire to keep prices up — increasing the pressure on the company to make profits.

“We need to invest billions to secure new gas and power supplies to the UK,” said Laidlaw. “We are spending £1billion a year on new sources of gas and power.

“We need to increase the proportion we get from our own resources to reduce our exposure to buying gas and power on the volatile wholesale markets.”

Private shareholder John Farmer asked the company to acknowledge the danger of increasing profits in the face of allegations it was charging “rip-off prices”. Carr said the business had a “high sense of social responsibility, but it is a business and as a business, it has to make a profit”.

He told another shareholder the company “believed in nuclear” and was seen by “most people” as playing a possible role in the British Energy sell-off.

Another shareholder suggested vegans should pay lower fuel bills because they used less energy.

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