Centrica, which own British Gas, has warned that higher energy bills could be on the way.
In an interim management statement Centrica reveals that recent turbulence in the worldwide energy markets may trigger higher energy bills in the UK, due to the natural disaster and subsequent nuclear issues in Japan, and unrest in North Africa and the Middle East.
The company claims that market conditions for the residential energy supply business are 'significantly more challenging than in 2010'.
In the UK, the forward wholesale prices of gas and power for delivery in winter 2011/12 are currently around 25 per cent higher than prices last winter, with end-user prices yet to reflect this higher wholesale market price environment.
However average residential gas consumption in the first four months of the year was 19 per cent lower than for the same period in 2010, and electricity consumption fell by 4 per cent, reflecting both the warmer weather this year, particularly in April, and underlying energy efficiency improvements.
In addition, the business faces higher non-commodity costs associated with transmission, metering and environmental obligations which are further impacting profit margins. Centrica therefore concludes that the 2011 result will be influenced by the recovery of higher wholesale prices and other costs in the retail price structure.
Centrica also asserts that British Gas is currently the cheapest supplier of electricity at average consumption of any major supplier in every region of the UK, which is attributed in part to the partnerships with Nectar and Sainsbury's. As a result, the number of residential energy accounts on supply has grown in recent weeks to nearly 16 million accounts, slightly above the level reached at the end of 2010.
In business energy supply and services, the company has announced it will continue to focus on increasing the value of the customer base and acquiring and retaining multi-site and SME customers.
