What is British Gas spending its profits on?

So, British Gas has announced soaring profits – but what are they doing with all their money? Especially when only 40% of a typical bill actually covers the cost of gas and electricity…

You’ve probably seen this morning’s news that Centrica, owners of British Gas, have recorded profits of over £2 billion, with British Gas up by 24%.

They might say to us that they’re investing some of these profits in our energy for the future. They are forging ahead with the world’s largest meter roll out in replacing our ‘dumb’ meters with ‘smart’ ones.

They’re also increasingly advising us to help our homes be more energy efficient. And, lucky British Gas customers can get ‘free’ insulation and ‘free’ electricity monitors. But it’s not free!

Who really pays for the ‘freebies’?

Check out your next bill and you will see it’s our money that’s often paying for these ‘freebies’. In a typical bill, only around 40% actually covers the cost of gas and electricity, on top of this we also have to pay for ‘levies’ to pay energy suppliers and other companies to give us advice and cut-price energy efficiency products.

Yes, we want successful companies, but we want them to be honest and open about how they are making money from us and how they are spending it. This is the very least we deserve.

When it comes to British Gas and their fellow energy suppliers, they need to do a lot more to convince us that every penny we give them via our bill is being spent wisely. Otherwise we just feel frustrated by these profit announcements.

Oh, and British Gas – you should also consider diverting some of that profit to improving your telephone support…. But I’ll save that rant for another day!

Gearoid Lane says:

24 February 2011

Which? makes a good point that only 40% of a customer’s bill covers the cost of the gas and electricity, and that the rest is for other costs. At British Gas, we set out a breakdown of all these costs on the back of our customers’ bills, so they know exactly what they’re paying for. We also give customers an even more detailed analysis once a year in their Annual Statement.

The other costs include transmitting and distributing the gas and electricity around the country, tax, and the costs of meeting the Government’s ambitious carbon reduction targets – much of which is achieved through insulation. And these costs are borne by all customers whether or not they avail of free or discounted offers.

Our offer of free cavity wall or loft insulation, open to all customers, is a first in the industry and is therefore above and beyond what we are obligated to offer. We are doing it because we think that helping our customers cut their energy use is the right thing to do. And we can do this because we’re a profitable business. Customers can register for free insulation today by logging on to http://www.britishgas.co.uk/freeinsulation.

Gearoid Lane
Managing Director, British Gas New Markets

Jenny Driscoll says:

25 February 2011

Do you think that people know exactly what they are paying for? I find most energy bills incredibly difficult to understand, and I suspect, like many I just look at the total I have to pay and don’t get round to read the other ‘stuff’. But it’s good to hear that British Gas are sending out annual statements as well….

However, I still take issue with using the word ‘free’. Am I the only one who thinks ‘nothing’s for free’? Maybe I’m too cynical. All British Gas customers have paid their bit towards your ‘free’ cavity wall and loft insulation and so I really do think that it’s time that you and all energy companies give them the real facts. Energy companies are taking millions from customers to cover the costs of energy efficiency products and services via their bills. Customers deserve better information on how much money has been taken and how it has been used. Yes it may be buried in the details of the bill but then suppliers appear to ‘exploit’ this money by using as an opportunity to market ‘free’ deals.

As you know Gearoid, we are very keen to work with you on this and other issues. At the moment energy suppliers do not do well in Which? customer satisfaction surveys. While stopping using the word ‘free’ – when it isn’t – is only a small step forward. It could be a start….

Jenny

Peter says:

11 July 2011

Consumers should be aware that free loft insulation is subject to a survey – after you have signed up. Having signed up for dual use tarif with British Gas, having been attracted by the loft insulation offer, the inspector duly came and inspected the loft. Whilst my loft complies with the minimum required headroom (I only have a small loft and there is a minimum headroom requirement), and access to one half is acceptable through a normal loft hatch, access to the other half was slightly more of a squeeze due to the proximity of the header tank. I was informed that I must be able to have the whole loft insulated to qualify (or was it 2/3rds I can’t remember), and due to Health and Safety, access to one half was too restricted for the workmen (how would we get them out of the loft if they had an accident etc), thus I did not qualify. OK, can you give me the loft insulation material and I will do it myself? I’m afraid not.

Gareth says:

all very nice to say but what it comes to me, a renter in my 20’s a bill of almost £200 for two months usage is not only more than 40% of my bills but in fact now almost 85% off my non-rent outgoings this month.

As a renter i cannot instruct insulation, though my flat is, but with the record cold winter we just had, paired with vat increases and salary freezes it feels like a proper slap in the face. like candy from a baby there is very little we can do but take it.

I work in a global company so am aware of the many departments that need to paid to ensure the company stays bouyant but seriously, yet again the public is getting dumped on which will only cause further debt and reduce consumer confidence

ready 2 give up on l says:

I am a single parent earing a low wage. It has been costs me between £30-£40 p/w to provide constant gas and electric through my metres which i cannot always afford as it’s often a choice beween that and food. I am disgraced that British gas is boasting profits this high when some of us can just about afford to eat. I do not recieve any freebies from B.P no cold winter payment. There have been many occassions when myslef and my children have had to go without heat through the winter just because i could not afford to put money in my metre. It’s things like this accumilated with food price increases, high unemployment and goverment cuts that makes suicide a greater option for some!

It certainly does feel like hard times – especially when you see how much you have to pay on a weekly basis. Take care…

Nikki Whiteman says:

Hello everyone – thought I should chip in to show you that British Gas have responded to some of the questions posed to them yesterday.

What do you think? Are you happy with how thorough they’ve been in their answers? Their comments are closed, but anyone can comment here!

2 March 2011

Quick update: if you want to see the British Gas response, here’s the video:

Chris Gloucester says:

“British Gas profits soar but how do customers benefit?”
Bitish Gas is a private company benefits from profits are not intended to benefit customers (unless it leads to more customers) it is intended to benefit the company owners.
That is the real life way of all privatly owned companies.
If customer benefit was the objective British Gas and all other energy suppliers would be taken back into public ownership, and run at wholesale cost plus operating cost only.

In the light of this reality it makes the original question a bit daft doesn’t it?

Sharon J. Bainbridge says:

24 June 2011

Shame on British Gas and other Electric and Gas supplies. Their wages for sales staff is a total disgrace. If my partner gets the sack for my comment so be it and I will fight them in court as I have had just about all I can take. I have a little girl with Asthma and cannot afford to get the damp done! I have been told that my partner is number 7 out of 35 for being one of the top sales team. Yet his take home salary last month was £700. Now that is less than I was earning 20 odd years ago without a family. And he has to pay very high petrol costs. It is time greedy big companies were named and shamed. My partner tells me they are changing their commission structure. The first two years with N Power I think it was he earnt £30,000 a year, that is going back 6 years ago. Life has been one big Butterfly Lullaby Nightmare. You can see my little girl showing how bad our house is. And another thing that bugs me is that no school should have asbestos on the roof! We send loads of money abroad yet we cannot help our own people in need!

Dave says:

12 July 2011

Chris is right. The company, lke all PLC’s, is run purely for the benefit of its shareholders. The more profits it can make from its customers, the bigger the bonus.We already heat our house with biofuel (and lots of warm clothes and blankets in the winter). If there was a way to opt out of buying electricity at inflated prices I would take it. The ‘insulation’ service is just a smokescreen. Most houses already have the minimum in the loft, and our house, like many older properties, is unsuited to wall insulation.

catronagrant33 says:

28 September 2011

Would someone then tell them please to give me my money I have been owed for fours years or is that part of their profit also? (Its the principle of the thing)
They are very quick to tell you they do not owe you anything, but in my case I showed my solicitor a letter from them showing me I was in credit after it had been read by their representative, anyone knows once you sell a property you need to show you are not leaving debt behind So British Gas I feel you have shot yourself in the foot PAY UP!

Hannah Jolliffe says:

Hi Catrona, Just to say we’ve edited your email address out of your username – it’s not a good idea to publicise your email address in case people use it to send you unsolicited emails. Thanks, Hannah

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