Centrica warns over proposal to cap energy prices
British Gas owner Centrica has hit out at a Government proposal to cap energy prices, warning that it could lead to higher bills for consumers and reduce competition.
The energy giant said that it has had regular dialogue with ministers and proposed “alternative ways” to improve the market and address concerns without resorting to price regulation.
In a trading update, the firm said: “Centrica does not believe in any form of price regulation. Evidence from other countries would suggest this will lead to reduced competition and choice, and potentially higher average prices.
“We have had a regular and constructive dialogue with the Government and have proposed alternative ways to improve the market further and address their concerns, without resorting to price regulation.”
Centrica said that it is “well-positioned” to deal with whatever form of market change is ultimately enacted.
Chief executive Iain Conn has previously warned that the proposed price cap could turn the group into a loss-making business.
The energy industry was left reeling in April after Work and Pensions Secretary Damian Green confirmed that the Government will cap energy prices if it wins the General Election in June.
The Tory manifesto is expected to include a promise to cut around £100 from energy bills by capping prices for the seven out of 10 households on standard variable tariffs.
In the market update, Centrica said that trading in the first quarter was hit by warmer than usual weather, leading to lower than planned energy consumption.
The group said it lost 261,000 customers in the period, confirmed that it will slash a further £250 million in costs and said that it is on track to axe 1,500 jobs this year.
Mr Conn will also face down shareholders at Centrica’s AGM on Monday.
It comes after the chief executive’s pay packet was boosted by around 40% to £4.1 million last year.