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Energy firms’ profits up despite consumption drop

Which? wants greater transparency over prices

British Gas’s parent group has announced it’s on course to see profits soar by an expected 43% for its residential arm this year.

The news comes the day after Scottish and Southern Energy (SSE) reported a 36% surge in half-year profits – but no customer price reductions are on the cards.

Both energy companies also saw a reduction in overall gas consumption – thought to be due to a combination of people tightening their finances during the recession and homes becoming more energy efficient.

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British Gas’s projected strong performance – reported by parent company Centrica – comes despite a 7% drop off in gas consumption for the first nine months of this year, compared to the same period last year. The energy giant attracted 200,000 new customers between June and the end of October, and its customer base now stands at 15.7m.

SSE reported pre-tax profits of over £410m, up nearly 36% compared to last year, attracting 150,000 extra customers in the six months to 30 September. It also saw ‘sustained falls in gas usage’.

Wholesale energy prices

Back in September 2009, energy complaints body Consumer Focus suggested that energy companies should cut customer prices in line with the drop in wholesale energy prices – equal to a cut of around £100 a year.

Fiona Cochrane, senior policy adviser at Which?, said: ‘When consumers are told that wholesale prices are falling and energy companies’ profits are rising, they’re going to question why their fuel bills aren’t being reduced. There must be greater transparency over prices to convince people that they’re not being ripped off by their energy supplier.’

British Gas lowered its gas prices by 10% in February 2009, and SSE reduced its gas prices in March by 4% – but further price drops in 2009 look unlikely because energy companies say they expect a rise in wholesale prices next year.

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