It’s not been an easy time to be in the energy game. The senders of the nation’s utility bills are an soft target at the best of times, but for the last two years the Big Six have been under sustained fire from politicians over alleged collusion.
Then there’s the collapse in the oil and gas price. Although you might expect an industry that sells gas to customers to welcome the reduction in price, in reality it's not so clear cut, at least not for Centrica, which has both 'upstream' and 'downstream' businesses.
Its large ‘upstream’ extraction operation suffered a £1.39bn impairment, which combined with the warm winter to cause its 2014 profits to plummet 35% to a measly £1.75bn. The firm then cut its dividend for the first time in 18 years, in an ‘urgent’ move to protect its credit rating.
It’s perhaps unsurprising that the it's struggled to find people to stay in the hot seat. Centrica replaced boss Sam Laidlaw with BP man Ian Conn on New Year’s Day, and its British Gas division (the other division being Scottish Gas) had been without an MD at all for eleven months.... until today.
Mark Hodges will take over as the company’s new chief on June 1st, moving across from the insurance business. Hodges was at Norwich Union and Aviva for twenty years, becoming UK chief executive in 2009, only to leave two years later for specialist broker Towergate Partners, which he quit in October.
On the surface it might seem an odd move, but energy and insurance aren’t quite chalk and cheese. Both are regulated and relatively unloved customer-facing industries. Presumably the main quality Centrica have seen in Hodges is the fact that he comes from outside and is therefore untainted, a breath of fresh air.
That, and of course his apparent willingness to stand the heat. The Competition and Markets Authority is in the midst of its price-rigging inquiry, having already accused the industry of overcharging customers by up to £234 a year. British Gas may have cut bills by 5% in January, but the pressure from customers and politicians to cut again while gas is cheap will remain. This will not be a comfortable job.
‘It will be a great privilege to lead British Gas, which has a proud heritage, and I am excited by the great potential the company has to benefit customers through improved service and in developing new products,’ Hodges said.
One has to wonder how long that excitement will last.