Shares in Centrica (LON:CNA) have gained more than two percent this morning, with investors responding positively to news that the group’s British Gas unit will hike electricity prices from next month. The FTSE 100 company meanwhile posted a drop in half-year earnings.
As of 10:23 BST, Centrica’s share price had added 2.26 percent to 202.90p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.75 percent higher at 7,428.22 points. The group’s shares have lost more than 15 percent of their value over the past year, and are down by some 13 percent in the year-to-date.
Centrica announced in a statement this morning that it was increasing the price of electricity on the British Gas standard tariff by 12.5 percent from mid-September, while keeping gas prices at current levels. The company forecasts that the average annual dual-fuel bill for a typical household on standard tariff will rise by £76 to £1,120, marking an increase of 7.3 percent. The FTSE 100 company further said that British Gas will give a credit to protect more than 200,000 vulnerable customers from the increase.
“We held off increasing prices for many months longer than most suppliers in order to protect our customers from rising costs, so it is a difficult decision to have to announce an increase in electricity prices,” Mark Hodges, chief executive of Centrica’s consumer business, commented in the statement, adding that the rise reflected an underlying increase in policy and transmission costs.
The British Gas owner updated investors on its half-year performance in a separate statement, announcing that its adjusted earnings had dropped 11 percent to £449 million in the first half of the year. Centrica’s adjusted operating profit meanwhile dropped four percent to £816 million reflecting lower profit from the group’s asset businesses. The results come as the British Gas owner looks to trim its E&P operations and focus on its energy supply and services business.