British Gas owner takes £70m hit from energy price cap

Britain’s biggest energy provider said it saw a “challenging” start to 2019, with falling UK natural gas prices adding to the woes, which will knock its interim performance and put “some further pressure” on its full-year outlook.

It also said it lost another 234,000 UK household customer accounts over the first four months of the year, with the announced increase in the level of the new default tariff price cap leading to a spike in customers switching in March and April.

The group - which is holding its annual general meeting on Monday - said the four months to April were impacted by a £70 million financial blow from Ofgem’s cap on the standard variable tariff (SVTs) in the first quarter, which was compounded by the warmer-than-expected weather and lower UK gas prices.

But gross revenues rose 54% in the four months and it kept its full-year outlook unchanged for operating cash flow and debt as it expects cost savings to ramp up in the final six months of 2019.

The group made savings of £58 million to the end of April and is on track for £250 million over the full-year, including moves to axe up to 2,000 jobs in 2019.

Iain Conn, group chief executive of Centrica, said: “Although operational performance has been largely in line with our plans, external factors have presented challenges for Centrica during the first four months of 2019, in the form of the default tariff cap, warm weather, and falling gas prices.

“We have also experienced extensions to nuclear outages.

“However, we continue to focus on those things we can control and as a result we expect to achieve our 2019 cash flow and net debt targets, while we are making further progress on cost efficiency delivery and on demonstrating margin capture capability.”

Centrica warned in February that the energy price cap will knock its 2019 performance.

Last July, the Government passed a Bill which called on Ofgem to impose a cap on all default energy tariffs, including the standard variable tariff, which came into effect at the start of the year.