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| Centrica hit by high energy costs | Centrica hit by high energy costs |
| (10 minutes later) | |
| British Gas owner Centrica has revealed a 20% drop in profits, the day after it implemented a record price increase. | British Gas owner Centrica has revealed a 20% drop in profits, the day after it implemented a record price increase. |
| Profits fell to £992m in the first six months of 2008, from £1.23bn a year earlier, with the firm blaming higher wholesale gas prices. | Profits fell to £992m in the first six months of 2008, from £1.23bn a year earlier, with the firm blaming higher wholesale gas prices. |
| Despite the drop in earnings, Centrica said it would raise its dividend to 3.9 pence a share from 3.35p. | Despite the drop in earnings, Centrica said it would raise its dividend to 3.9 pence a share from 3.35p. |
| On Wednesday, British Gas raised gas bills by 35% with immediate effect, to restore "reasonable profitability". | On Wednesday, British Gas raised gas bills by 35% with immediate effect, to restore "reasonable profitability". |
| Centrica said the results were "good" given the tough market conditions. | Centrica said the results were "good" given the tough market conditions. |
| This is a business that has got a million shareholders - a lot of pension funds and people have got their savings invested in British Gas shares and we have to look after them Sam Laidlaw, chief executive, Centrica Record rise for British Gas bills | |
| The company's shares added 1.7% in London following the earnings news. | |
| Centrica said it was obliged to raise gas prices in light of dwindling reserves and higher oil prices that had pushed up costs. | Centrica said it was obliged to raise gas prices in light of dwindling reserves and higher oil prices that had pushed up costs. |
| Sam Laidlaw, Centrica's chief executive, justified the price rise saying: "This is a business that has got a million shareholders - a lot of pension funds and people have got their savings invested in British Gas shares and we have to look after them". | Sam Laidlaw, Centrica's chief executive, justified the price rise saying: "This is a business that has got a million shareholders - a lot of pension funds and people have got their savings invested in British Gas shares and we have to look after them". |
| Fuel poverty | |
| But Patrick South, Age Concern's Head of Public Affairs, said: "Energy companies say they can't absorb wholesale price rises, but in light of their profits this will sound hollow to the one in three pensioners likely to be in fuel poverty this winter." | |
| A committee of MPs recently warned that higher gas and electricity bills would have serious consequences for millions of households. | |
| The committee was worried that the UK's energy markets were not functioning "as efficiently as they should". | |
| After Centrica's results, a group of council leaders said energy suppliers should be subjected to a £500m annual charge to beat fuel poverty and cut carbon emissions. | |
| Paul Bettision, Chairman of the Local Government Association's Environment Board, said: "Energy companies are making massive profits at the expense of hard working families." | |
| Centrica's move to increase prices on Wednesday came after EDF Energy raised prices last week. Analysts say other firms are likely to follow suit. | Centrica's move to increase prices on Wednesday came after EDF Energy raised prices last week. Analysts say other firms are likely to follow suit. |
| Phil Bentley, managing director of British Gas told the BBC: "The price of gas for this winter, even though it's fallen a little bit, it's still double what was last year". | Phil Bentley, managing director of British Gas told the BBC: "The price of gas for this winter, even though it's fallen a little bit, it's still double what was last year". |