Energy customers face higher bills

British Gas owner Centrica said the wholesale price of gas and power for delivery next winter is around 25% higher than last year, but the price paid by households has yet to reflect this higher price.

The company, which has around 16 million energy accounts, said its results for 2011 were likely to be “materially influenced” by the recovery of higher wholesale prices and other costs.

It said: “Market conditions for our residential energy supply business are significantly more challenging than in 2010.”

A Centrica spokesman said the company had yet to take a decision about whether to increase tariffs.

The company pushed up bills by 7% after the coldest winter in 100 years but subsequently posted a 24% surge in operating profits to £742 million in 2010.

Centrica said increased profits from its exploration and production business were expected to more than offset lower profits from consumer-facing operations.

But it added that a decision by Chancellor George Osborne to increase the supplementary tax on oil and gas production from 20% to 32% in this year’s Budget would offset the benefit of higher commodity prices.

It said in a trading update: “We continue to expect growth in our 2011 group earnings but at a more modest rate than anticipated at the time of our last results announcement as upstream profits have become more highly taxed.”

The company has already warned the tax hike could mean that one of three fields in Morecambe Bay may not reopen following maintenance. Shares were 3% lower today.