Britain leaving the EU could increase gas bills, Centrica warns

One of the UK’s leading energy suppliers has said Britain must stay in Europe to keep household bills prices down.

Iain Conn, chief executive of British Gas owner Centrica, said that only by staying in Europe could Britain exert its influence to keep energy supply across the continent efficient.

“Prices are going to become really important for British consumers and we need to do everything we can to make sure that the market in Europe is as competitive as possible,” Conn said during a grilling about rising gas profits at Centrica’s residential supply business, British Gas.

The UK imports more than half of its gas from Europe, mostly from Norway, and the volume is expected to climb over the next decade.

“It’s very hard to see what we can do to drive competition in Europe if we are outside. That’s why I think we’re better off in,” Conn said.

At the group level, Centrica’s adjusted, pre-tax profits fell from £1.3 billion in 2014 to £1.1 billion in 2015, as low commodity prices continued to affect the company’s exploration and production business.

But the shares rose 4% to the top of the Footsie as the company insisted that it was expecting to increase its cash flow during 2016. Centrica said it would cut its full-year dividend by 1.5p a share from 13.5p to 12p a year.

The company is making £750 million of cuts over the next five years as it restructures the group to focus on customer supply. Centrica said it would make savings of £200 million by the end of this year, after cutting 3000 jobs, two-thirds of them in the UK. In total, Centrica will cut 6000 jobs by 2020.

The UK’s energy suppliers are currently being investigated by the Competition and Market Authority and Centrica, as the biggest supplier in the market with 15 million customers, is under particular scrutiny on prices.

British Gas profits climbed by almost a third in 2015 to £574 million as customers turned up the heating, after winter temperatures in 2015 turned colder.

The 31% increase in profits in the main customer business comes despite plunging global gas and oil prices.

Centrica said the increase in British Gas profits was mostly down to the increased consumption in power by householders.