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Industry news
Cold winter leaves utilities with a warm feeling inside
Monday, January 25, 2010
The cold winter weather this year will deliver a £100 million boost to the profits of Britain’s Big Six energy companies, according to forecasts by City analysts.
Centrica, the owner of British Gas and Britain’s largest gas and electricity supplier, with 16 million customers, is likely to be the biggest single winner, Peter Atherton, utilities analyst at Citigroup, said.
He forecast that Centrica would rake in extra operating profits of between £40 million and £50 million over the past month, after a plunge in average UK temperatures in midDecember that prompted millions of consumers to turn up their thermostats and use more gas and electricity.
He said that the company had benefited by about £1.5 million in extra profits each day in that period.
Scottish & Southern Energy (SSE) was likely to enjoy a boost to profits of £25 million to £30 million over the same period.
The other big suppliers — EDF, E.ON, ScottishPower and RWE npower — also stood to scoop windfall profits, Mr Atherton said. “They will all have benefited. It could easily add up to an extra £100 million in profits between them.”
Consumption of gas and electricity soared in mid-December as temperatures plunged and Britain was hit by its most severe bout of winter weather in decades.
On January 7, UK daily gas demand hit an all-time record high of 454 million cubic metres, up 30 per cent from a seasonal average of 350 million cubic metres.
On the same day, British electricity demand hit a high of 58 gigawatts, up from a seasonal average of 56.2 gigawatts.
Yet the predictions of big increases in corporate profits have stoked anger from consumer groups. Robert Hammond, energy expert for Consumer Focus, said: “All the energy suppliers will be enjoying rocketing profits while millions of consumers will be worrying about how to afford to keep warm. Suppliers have failed to pass on wholesale price cuts and have boosted their profits by not reducing prices before customers turn up their heating in the cold winter.”
He called for a Competition Commission investigation to address the problem.
This story was featured on the Times Online website.
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