Shares in Centrica (LON:CNA) have advanced marginally in today’s session, holding steady with UK lawmakers set to debate energy prices. The debate comes after the company’s British Gas division recently extended a price freeze until August. Goldman Sachs meanwhile reiterated their negative view of the FTSE 100 group yesterday.
As of 09:23 GMT, Centrica’s share price had inched 0.18 percent higher to 219.70p, underperforming the benchmark FTSE 100 index which has gained 0.88 percent to 7,433.84 points. The group’s shares have lost a little over two percent of their value over the past year, and are down by some six percent in the year-to-date.
Shares in Centrica have been steady with the parliament set to debate energy prices today. The Financial Times notes that 50 MPs are campaigning for a price cap on the ‘standard variable’ tariffs that about two-thirds of households pay, and which tend to be more expensive than fixed tariffs.
“There seems to be cross-party support for something to be done,” Oliver Salvesen, an analyst at Jefferies, told Bloomberg by phone yesterday. While it’s difficult to judge whether Britain will re-regulate its household energy market, “investors are concerned about what the government will do”.
The debate comes after British Gas said last month that it will extend its price freeze for customers on its standard energy tariff until August, despite a rise in external costs.
In other Centrica news, Goldman Sachs reiterated its ‘sell’ stance on the stock yesterday, pointing to the UK energy supplies, the British Gas owner’s rising pension costs, as well as the group’s gas contract with Cheniere, which the analysts believe will be loss-making, based on their gas price assumptions.
“With regulatory uncertainty around UK energy supply (a significant driver of Centrica’s free cash flow [FCF]; we estimate UK energy supply accounted for 45 percent of 2016 FCF), we see stronger EPS [earnings per share] growth, greater visibility and less business-model risk elsewhere,” Goldman pointed out, as quoted by Proactive Investors.