British Gas owner to post higher profits thanks to new cap rules

British Gas owner Centrica triggered a new profits storm today as it revealed profits will be at the top end of expectations, thanks to new rules allowing suppliers to charge more even after gas prices come down.

Centrica said its retail divsion’s profits were “significantly ahead of expectations”, because of new allowances British Gas could claim due to past costs.

Under rules launched last year, suppliers can claim back an extra £6 per customer against the price cap when the price of buying gas now is higher than gas futures contracts. Ofgem said the rules would “secure market stability”.

“As always, uncertainties remain over the balance of the year including the impacts of weather, commodity prices, the economic environment, any changes to regulation or government policy, asset performance and the competitive backdrop for our energy supply businesses,” Centrica said. “This results in a range of possible outcomes for the full year.”

The group also told investors that its energy marketing and trading business has seen a “strong” performance to date as well, while volumes from its gas production, nuclear and gas storage divisions have been “good” and helped to offset the impact of falling commodity prices.

Centrica announced the update ahead of its AGM today, where shareholders will vote on CEO Chris O’Shea’s pay. He made £4.5 million after bonuses last year and his base salary is set to rise to £815,000 this year

British asset manager Abrdn has reportedly said it plans to vote against the group’s remuneration deal for bosses.