Price cap hits profits at British Gas

British Gas has reported its lowest profits in memory after Britain’s biggest energy supplier was hit by the government’s price cap on energy bills.

Operating profits at British Gas plunged 71 per cent to £137 million while Centrica, its parent group, said operating profits fell 35 per cent to £901 million as it was also hit by lower gas prices.

The energy group said it may not be able to sell its stake in Britain’s ageing nuclear plants this year as planned as it booked huge write-downs that sent it to a £1.1 billion pre-tax loss.

It also told the City that profits for 2020 would be lower than expected, sending shares down almost 16 per cent in morning trading.

Centrica made no update on the search for a new chief executive to replace Iain Conn, who has presided over a 70 per cent drop in share price since taking the top job in 2015 and announced last year he would stand down this year.

Centrica supplies gas and electricity to about seven million households in the UK through British Gas, operates a home services division and also supplies homes and businesses in North America.

It owns a 20 per cent stake in the nuclear plants and a controlling stake in Spirit Energy, a North Sea oil and gas business, although it is looking to sell both.

British Gas has been struggling amid fierce competition from cut-price rivals as well as the cap on bills, which forced it to cut prices at the start of last year. The company lost a further 286,000 energy supply customer accounts in 2019 although the rate of losses slowed.

British Gas energy supply profits of £137 million were the lowest since at least 2010 and Sarwjit Sambhi, head of the division, said he could not recall a lower figure.

Centrica put its 20 per cent stake in Britain’s nuclear plants up for sale in 2018 and had hoped to sell it by the end of this year. The sale has been complicated by extended safety outages at some of the reactors and Mr Conn said it was made trickier because EDF, the majority owner, was also looking to sell some of its stake.

Shares in Centrica fell 13½p, or 16 per cent, to 71¼p.