May 8, 2017
British Gas is on course to lose a million customers by the end of the year, after dropping 261,000 customers in the first few months of 2017. This is despite British Gas being the only "Big Six" supplier not to announce a price rise in the first few months of this year.
The fall comes on top of the 400,000 customers that switched away from British Gas in 2016. This takes the suppliers to below 14 million UK customers for the first time since the 1970s.
The Conservative Party has pledged to cap energy prices if they win the general election next month and Centrica, the owners of British Gas, is hoping to reassure shareholders that it can withstand the plans. The Tories aim to cut around £100 from annual household energy bills by capping prices for the seven out of ten households on standard variable tariffs.
Analysts have warned that the Government intervention on prices will come at a significant cost to Centrica. The supplier currently supplies more than 6 million UK households with energy on standard variable tariffs.
Centrica has warned any practice of price regulation would lead to reduced competition in the market, with customers having less choice and higher bills overall. Centrica has proposed alternative ways to improve the market, without resorting to price regulation.
John Penrose, a Conservative MP who has led calls for a relative price cap, said Centrica's comments were an empty threat. "It isn't sustainable for the big six to threaten they'll scrap their cheapest tariffs. They would condemn themselves to a slow commercial death, milking a declining customer base because they wouldn't win any new business."
Centrica remains the UK's biggest domestic energy supplier. They also earned the highest profit margins in the industry on their customers last year, at 8.8% of earnings before interest and tax, versus an industry average of 5.6%. However, the company is expected to cut 1500 jobs this year to generate cost saving of £250m in addition to the £384m it reported in the previous year.
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Posted on May 8, 2017 at 02:18 PM