The fall in earnings at British Gas, to £379m, came in the same year that prices rose by a record 35%. The one consolation for owner Centrica is that at least it's not RBS...
Centrica said the dramatic drop was due to soaring wholesale energy prices, as it didn't pass the full rise in prices on to customers. But we can't imagine it receiving too much sympathy. British Gas customers still paid an average £400 extra for gas and electricity last year following two rounds of price rises. Yet the company's profits remained well below the £571m recorded in 2007.
This didn't help its parent Centrica, which was also hit by a £1bn tax bill. All in all, the group posted a £144m pre-tax loss for 2008, compared with a £1.5bn profit in 2007.
Thanks to the wildly fluctuating wholesale price of energy, British Gas's charges have been up and down like a gas-fired yo-yo lately. Watchdog Consumer Focus showed that the typical annual gas bill for a customer paying quarterly was £568 at the start of 2008, up to £882 by January 2009, and down to £794 following a 10% price cut earlier this month. Just don't mention how that's far less of a drop than the fall in wholesale gas prices.
Centrica prefers to highlight its more positive activities: investing £1.2bn in the Baird project to tackle the country's lack of gas storage; putting £34m into a scheme to help those less able to pay their bills; and creating 1,500 new engineering and ‘green' jobs in the UK, in areas such as energy efficiency and wind farms. It's certainly saying all the right things - let's hope it's not just a load of hot air. For most people, of course, the big question for the company, regardless of its rapidly emptying pockets, is whether further price cuts are on the way.
In today's bulletin:
RBS slumps to record loss - and Sir Fred gets £650k pension
British Gas fails to profit from higher prices
Berkeley plans to make hay from housebuilder woes
SMEs' unhealthy desire for Fry and Sugar
Why small businesses need strategy more than ever