British Gas profits dropped by 34% in 2008 to £379 million.

Centrica, which owns British Gas, announced the drop today (26 February, 2009), stating its total operating profits came in at £1.94 billion (a touch below last year’s result) in the 12 months to 31 December, 2008.

British Gas, which trades as Scottish Gas in Scotland, said the downturn was due to the wholesale gas price rises throughout last year. In turn, British Gas put up its consumer gas prices by 35% in 2008, a record rise.

Consumer prices have already dropped in 2009, but only by 10%, causing some consternation amongst consumer groups.

The Centrica Chief Executive Officer Sam Laidlaw said: “Whilst the overall economic climate in 2009 is clearly very challenging, the operational and structural progress we have made over the last two years has strengthened the group and positioned us well to continue to invest for our customers and our shareholders.”

This investment referred to is believed to be the creation of some 1,500 new jobs, mainly regarded as “green.”. These will focus on energy efficiency projects, such as wind farms. It also includes a £1 billion investment in a new gas storage facility.

But the British Gas figures are bound to provoke further ire from the energy watchdog groups.

Figures from the Company Focus group highlighted the fact that the average annual bill for a British Gas customer, paying not by direct debit but by cash, or cheque quarterly, stood at £568 at the beginning of 2008.

And when questioned, the British CEO was non-committal about further price drops for the U.K. consumer, but did say that if wholesale prices continued to drop, then there might be further reductions.

Perhaps more worryingly he said that the extra investment was needed because they would have to import more gas in the future, which highlights the fact that the U.K.’s own gas reserves are reducing, which could possibly point to more increases, not reductions, in the long term future.

Guest Article by Neil Camp

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