British Gas sees profits halved

Profits have halved at British Gas due to higher commodity prices and lower energy consumption, it is expected to reveal this week.

Half-year profits at the UK's biggest energy supplier are expected to be GBP 293 million, down from GBP 585 million in the same six months last year.

Earnings at parent company Centrica are also down at an estimated GBP 1.3 billion compared with GBP 1.56 billion in 2010, due to higher taxation combined with the lower performance at British Gas.

Centrica's tax bill for the full year is set to top GBP 1 billion. That is in part due to the North Sea tax announced by Chancellor George Osborne in the last Budget, which companies predicted would drive investment from the UK.

It is thought the new tax will cost Centrica about GBP 50 million.

The company has added customers however, and some of its divisions have grown earnings. These include North America and Centrica Energy.

British Gas recently announced that bills would rise due to the high cost of gas on the wholesale market. It put up gas prices by 18 per cent and electricity bills by 16 per cent.

Last week, Scottish and Southern became the latest company to raise bills.

Scottish Power has also announced price hikes.

Newly revealed reforms designed to raise funds for wind power and nuclear energy will also push up the cost of bills.