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British Gas operating profits rise by 2% to £906m

British Gas owner Centrica has fuelled further controversy over energy prices after reporting another profit rise at its British supply business.

It said operating profits at the energy and services arm covering the UK and Ireland rose by 2% to £906 million last year from £891 million a year earlier, helping wider group operating profits at Centrica jump 4% to £1.5 billion.

The company is expected to face fresh calls to address tariffs for businesses and domestic consumers.

The industry has faced mounting pressure to treat loyal customers fairly and has been criticised for being slow to pass on falls in wholesale gas prices, with consumer groups hitting out at the size and timing of cuts.

British Gas announced it was extending a price freeze on its standard energy tariff until August, “despite increases in external costs”, but customers are expecting prices to soar later this year, following the Brexit-induced collapse of the pound and rising wholesale energy prices.

Centrica’s British Gas residential energy supply arm, which only covers UK homes, reported an 11% drop in operating profit to £553 million, compared with £623 million in 2015, but said the reduction was due in part to a customer exodus.

More than 409,000 UK home customers left the business in the year to December 31, marking a 3% fall to 14.25 million.

But the group said it stemmed the outflow in the second half of the year after launching new tariffs and improving customer service.

Group chief executive Iain Conn said: “2016 was a year of robust performance and progress in implementing our customer-focused strategy.

“We delivered our key objectives including improved customer service and more innovative offerings and solutions – while repositioning the portfolio, building capability and driving significant cost efficiencies.”

British Gas is one of few so-called Big Six energy suppliers to have frozen prices in recent months.

Companies including Npower, EDF and ScottishPower have hiked customer prices, with many blaming rising wholesale costs.

ScottishPower recently announced that standard gas and electricity bills would rise 7.8% from March 31, while Npower set out plans to hike gas and electricity prices by 9.8% – a move that will add £109 to annual dual fuel bills.

Centrica said revenues for 2016 dropped 3% to £27.1 billion, versus £28 billion a year earlier.

But the company managed to swing to a pre-tax profit of £2.2 billion, after reporting a £1.1 billion loss due to a writedown last year.

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Partial shutdown at gas platform, storage site outage drive prices higher

British wholesale gas prices rose on Monday as a partial shutdown of the Elgin-Franklin platform in the North Sea and an extended outage at a gas storage facility tightened supplies, traders said.

The day-ahead contract rose by 1.65 pence to 53.00 pence per therm by 1137 GMT, lifted by concerns over gas supplies filtering through into contracts across the near and forward curve.

Gas for immediate delivery was up 0.75 pence to 53.50 pence per therm.

Early on Monday, Total E&P reported that offshore reduction had tripped at its Elgin-Franklin gas platform in the North Sea.

“Offshore production has tripped… On restart production will be limited to five million cubic metres/day for an unknown period,” Total UK Exploration and Production said in a market message.

A company spokesman told Reuters that the Elgin B and West Franklin platforms had been shut down after difficulties drilling a well, but Elgin A and Franklin were unaffected. [GAS/OUT]

Further tightening supply was Centrica’s announcement that an outage reducing withdrawals from Britain’s largest gas storage site Rough would be extended by a month until March 1.

An unplanned outage at SSE’s Hornsea gas storage site will also reduce withdrawal capacity until Feb. 3, the SSE said.

Britain faced a gas shortfall of 26.1 million cubic metres (mcm) on Monday, with demand estimated at 316.1 mcm/day and supplies at 290.7 mcm/day, according to National Grid data.

“Sentiment has fed through into the near curve which has seen prices further supported by the extension to the Rough outage,” said Nick Campbell, risk manager at Inspired Energy.

Average temperatures in Britain are milder than expected on Monday but forecasts for Tuesday and next week indicate colder- than-anticipated weather, according to Thomson Reuters analysts.

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In the Netherlands, the day-ahead gas price at the TTF hub was up 0.65 euro to 20.35 euros per megawatt hour.

In the European carbon market, the benchmark Dec-17 contract was 0.22 euro higher at 5.14 euros a tonne.

(Reporting by 0leg Vukmanovic in Milan; editing by Nina Chestney)

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Energy bills to rise up to 28% for thousands in UK as fixed contracts end

Energy bills to rise up to 28% for thousands in UK as fixed contracts end

With 77 deals expiring before end of April, many customers will find themselves being rolled on to most expensive tariffs

Thousands of UK households are facing gas and electricity bill rises of up to 28% as fixed price contracts signed before recent energy price increases come to an end.

So far this winter, EDF, npower and Scottish Power have all announced hikes, meaning the customers of those companies need to look carefully at what they paying, particularly if they coming off a fixed tariff.

Moneysupermarket has said 77 fixed energy deals are set to expire before the end of April, leaving average households typically facing a £200-a-year increase to around £1,100 a year for gas and electricity.

Gas and electricity price increases of up to 15% – and much more for those coming off old fixed tariffs – have left consumers scrambling to get on a another fixed deal. But even those who switch supplier are likely to end up paying more over the coming year.

EDF, npower, Scottish Power and SSE are among those with tariffs finishing, alongside deals from smaller suppliers such as Spark and Extra Energy. When fixed energy deals end providers roll customers on to their standard variable tariffs, which are typically their most expensive.

Some customers who were on especially cheap tariffs have been told their bills will rise 28%.

One supplier, npower, shocked the industry and even the regulator Ofgem when it announced it was raising electricity prices by 15% while gas bills will rise 4.8% adding a typical £109 a year to average bills.

The other firms to raise electricity prices have announced rises of around 8%.However, British Gas said last week it was freezing bills.

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Moneysupermarket said consumers could switch penalty-free up to 45 days before their existing deal is due to end, under the regulator’s switching rules.

Currently the cheapest providers are names that many consumers will be unfamiliar with, such as Iresa, Economy Energy and Tonik. Of the big six providers, Scottish Power’s online fixed saver is one of the cheaper deals.

Stephen Murray, energy expert at Moneysupermarket, said: “The energy market is really unpredictable at the moment and a huge part of that is rising prices. In June last year the cheapest deals were below £750, whereas currently the average cost of the top 10 cheapest tariffs is £880. It is worth noting that these deals still represent a significant saving on standard variable tariffs.”

He said customers on expiring tariffs should act now to lock in new fixed deals and avoid being rolled on to standard variable tariffs.

“The British Gas price freeze may sound like a fair alternative, but customers are still overpaying by around £170 and so the message is the same – don’t rest on your laurels, standard tariffs still remain among the most expensive. It only takes a few minutes to swap providers to save almost £200 each year.”

Mobile phone users are also facing more expensive bills in the coming months, following the rise in inflation. Vodafone, EE and O2 have said millions of mobile phone customers will face inflationary mid-contract price rises in the next couple of months.

EE is raising some customers’ monthly bills by 2.5% from 30 March, in line with January’s retail price index inflation figure. O2 will increase monthly its charges by 2.6% in April, and Vodafone bills will rise by March’s inflation figure – also from April.