UK energy giants back in the spotlight amid storm

Another heavyweight week for blue-chip updates will see figures from supermarket Sainsbury’s and energy companies Centrica and SSE

Sam Laidlaw
Sam Laidlaw

Another heavyweight week for blue-chip updates will see figures from supermarket Sainsbury’s and energy companies Centrica and SSE.

British Gas owner Centrica and rival energy giant SSE unveil latest financial figures amid a political storm over inflation-busting tariff hikes for households.

The suppliers are under pressure over the increases after Labour challenged the Government by pledging to freeze tariffs if it wins power.

Critics have challenged the assertion that rising wholesale energy costs and Government green levies are to blame for the sharp price rises - which come at a time when household incomes remain under pressure.

Amid the ongoing furore, Centrica chief executive Sam Laidlaw has decided not to take his bonus this year, which could be worth up to £1.7 million. He announced his decision after British Gas revealed last month that electricity bills were to rise by 10.4% and gas tariffs by 8.4%. The move affected 7.8 million households.

The company says average 5% profit margins from its residential arm are fair and used to fund investments - and that the business would be loss-making in 2014 if it did not raise prices to cover costs.

Half-year profits from the division this year rose 3.2% to £356 million. Adjusted operating profits at parent Centrica were up 9% to £1.58 billion. The company will unveil third quarter trading figures on Thursday.

SSE, which trades as Southern Electric, Swalec and Scottish Hydro, was the first of the major suppliers to announce a tariff rise, lifting prices by an average of 8.2%.

It blamed the same factors as those cited by Centrica. It increased annual profits at its household retail arm by 28% to £410.1 million in the year to March as gas consumption rose by a fifth. Overall pre-tax profits climbed to £1.41 billion. But in a trading update earlier this year, it revealed that it made a loss on its retail operations in the six months to the end of September as wholesale prices rose.

SSE publishes half-year results to the end of September on Wednesday.

Journalists

David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer