British Gas has shed more than 100,000 customer accounts since the start of the year, its parent Centrica has revealed, as the UK’s largest energy provider was warned that looming price rises will increase the number of households switching to rival firms.
The rate of people leaving British Gas slowed, from 823,000 quitting between July and October last year, to the loss of 111,000 customer accounts in the first four months of 2018.
However, the figures do not reflect the impact of a recent above-inflation price rise by the business, which takes effect at the end of this month. Jefferies bank said account losses would likely pick up then.
Colder than normal weather had mixed results as the “beast from the east” led to higher demand for energy but drove up call-out costs for boiler repairs.
British Gas had its busiest ever week for boiler repairs during the cold weather in February and March, leading to service plan costs that will drive down first-half profits at its services unit compared with last year.
Although Centrica has largely withdrawn from oil and gas production, as well as large-scale power generation, its Morecambe Bay gasfield suffered outages. Its 20% stake in the UK nuclear’s power fleet will also suffer this year because cracks in one reactor resulted in it being taken offline temporarily.
Nevertheless, Centrica said it was on track to hit its targets for 2018, including holding dividends at 12p a share.
The company said it was making “good progress” on its £1.25bn-a-year cost-cutting programme. About 1,000 of 4,000 planned job cuts will have taken effect by the year’s end.
The number of connected home customers – those using its Hive smart home devices – has reached 1 million. Its decentralised energy business has also had growth.
Iain Conn, the Centrica chief executive, said the impact on British Gas of the government’s price cap on standard variable tariffs (SVTs) remains uncertain but the company expects the measure to be in place by the end of the year.
British Gas has 3.7 million customers on SVTs, down from 4.3 million at the end of 2017. It expects to cut that further, to about 3 million by the time such tariffs are capped, reducing its exposure to the measure. British Gas has just under 12.8m household accounts.
Analysts said there had been good progress on shifting people off the tariffs and on to better-value fixed deals. Asked if customer losses would likely go up significantly when the company’s standard tariff increases at the end of May, Ahmed Farman, an energy analyst at Jefferies bank, said: “Yes, assuming that SVTs become more expensive relative to offers from independent suppliers.”
Centrica’s share price closed up more than 1% at 149.15p but is still about a fifth lower than before Theresa May confirmed the price cap last October.
Conn admitted that 2017 had been “extremely challenging” for Centrica. However, the company defended its management after investors complained about the share price at its annual general meeting on Monday, arguing the firm had made progress on cost-cutting and improving its balance sheet.
The executive board has foregone bonuses for 2017 because of the share price crash, with Conn missing out on £610,000.