British Gas profits fuel price cut hopes

Could British Gas customers be set for price cuts?

British Gas owner Centrica today fuelled hopes of further cuts in its energy bills after posting a sharp increase in profits at its residential arm.

The energy provider has seen an 80% jump in first-half profits at British Gas following price rises during 2008 and higher demand as temperatures dropped in January and February. 

Operating profits hit £299 million for the six months to 30 June, up from £166 million for the same period last year. Revenues for the period were up 15% to £4.38 billion.

British Gas said it had signed up 6,000 more households since January, as a 10% cut to its standard gas tariff and a 10% reduction in its electricity price in May tempted cash-strapped consumers.

It added that it continues to improve its customer service, with a further reduction in telephone answering times and 1.4 million customers now serving their own accounts online.

However, it held just over 15.5 million customer accounts at the end of June - slightly down on the 15.6 million it reported for the end of December.

Furthermore, it added that the recession and more energy efficiency measures are having an effect on demand.

"Average gas consumption is down 6% year-on-year and electricity is down 1% but we compensate for that with our services business which is growing strongly," chief executive Sam Laidlaw said.

However, any further price cuts are dependent on several factors, including the weather, the situation in Ukraine and winter prices, which are currently high.

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