Icy winter boosts profits for gas supplier despite slump in prices, while production side suffers

British Gas expects a "strong performance" this year after the cold weather prompted seven per cent higher gas usage than in 2009, with electricity consumption also up two per cent.

Profits at the residential business will be "heavily weighted towards the first half" of this year, the company added.

Despite the profit boost, British Gas said average bills for its 15.9 million customers in the first quarter of 2010 were lower than a year earlier due to its seven per cent gas price cut in February.

The prediction of more strong profits at British Gas comes after the UK's biggest energy supplier delivered record operating profits of 595m last year – up from 376m in 2008.

British Gas has gained more than 200,000 new residential customers so far this year, as well as 100,000 servicing contracts. The group installed 20 per cent more central heating systems than a year earlier – thanks to cheaper pricing and the Government's boiler scrappage scheme – but said costs rose due to the higher number of boiler breakdowns in the cold snap.

But the weather also boosted profits at its business arm due to higher than expected demand for energy as well as strong renewals and an improved operating performance.

The healthy profits from the group's energy supply arm were however offset by much tougher conditions for Centrica's upstream production business.

While gas and oil production was 59 per cent ahead of the previous year – helped by acquisitions – wholesale gas prices are still low.

Centrica expects the "weak commodity price environment" to continue to impact the production business this year.