Centrica share price: British Gas boosts profits through over-estimated energy bills

British Gas has been accused of boosting its balance by keeping hold of money owed to ex-customers who have built up credit on their accounts by using less energy than their estimated consumption.

A whistleblower has revealed that the energy giant added £20 million worth of credit balances to its annual accounts in one recent financial year. Standardly, the practice amongst energy companies is to wait six years before adding a departed customer’s unused credit as an asset in the company accounts.

A spokesperson for the business owned by Centrica Plc (LON:CNA) commented,

“We make every effort to track down any customer who has left British Gas and has credit with us so that it can immediately be returned to them. If a customer subsequently contacts us, we will always issue any credit owing to them.”

The Centrica share price was 0.28 percent higher at 357.10p as of 9:18 GMT.

Mistrust of energy companies Under the current system, energy companies estimate customers’ future usage on the basis of prior usage and charge accordingly. If a customer’s energy consumption turns out to be lower-than-estimated, credit is built which can then be reclaimed by the customer or used to offset subsequent bills.

British Gas used ‘credit’ run up by customers who had stopped using its service to boost its balance sheet profits. The energy giant used to wait six years before taking the money but according to the whistleblower a special team was set up to speed up this process so that efforts to locate people conducted and the money then taken into company accounts over a much shorter timescale if that process failed.

British Gas confirmed that it had set up a team to improve its credit balance, but the company declined to provide information about the team’s contribution to its business. The company argues that it hasn’t been able to locate all the customers who have left its service, gone bankrupt or changed addresses, despite its best efforts.

The company allegedly benefited to the tune of £20 million last year.

The shadow energy secretary Caroline Flint said that she was shocked by the allegations. She insisted that companies should repay customers who are in credit or use the credit to “keep bills down or help other vulnerable customers, not boost their profits”.
“With practices like this it’s no surprise people are mistrusting of the energy industry,” she said as quoted by the International Business Times.

As of 10:30 GMT buy Centrica shares at 357.20 pence
As of 10:30 GMT sell Centrica shares at 357.10 pence