Centrica Boss: 'We Act In National Interest'

The chief executive of Britain’s biggest energy supplier will defend his company against claims of industry profiteering on Monday by declaring that its financial strength enables it to act in the UK’s national interest.

In a speech to a conference organised by The Spectator magazine, Sam Laidlaw, the boss of British Gas-owner Centrica, will argue that Britain requires financially robust companies to make long-term commitments to gas supply contracts, without which the country’s energy security would be at risk.

Mr Laidlaw will speak on the same day that the Government unveils reforms to environmental levies on energy bills, including a £12-per-electricity account rebate triggered by shifting a tariff which supports fuel-poor households into general taxation.

“Investing for long-term security in UK energy is often couched in terms of what we can do to make sure that we keep the lights on,” Mr Laidlaw will say, according to a person briefed on his speech.

“That’s clearly vital. But with all the debate about electricity, it’s important not to forget about gas. If there is one energy source which dominates our current and future energy mix it is gas.”

The Centrica boss, who has pledged to waive a potential multimillion pound annual bonus amid the political furore over energy prices, will go on to say:

“We need strong companies with healthy balance sheets – and a drive to act in the national interest – to enter into the types of contract and investment required to secure longer-term energy supplies for the UK.”

In total, Centrica has made approximately £50bn of commitments to long-term gas supply contracts from overseas, with the level of gas imports required to meet Britain’s energy needs forecast to rise from around 50% today to about 75% by 2020.

Last month, the company entered into a £4.4bn deal with the Gulf state of Qatar under which the British Gas parent will buy up to 3m tonnes annually of liquefied natural gas over a four-and-a-half year period. Such a quantity would deliver sufficient gas to satisfy the demand of about 3m households, Centrica said.

Mr Laidlaw has consistently argued that profit margins at its residential supply business are close to being wafer-thin.

He is expected to imply in his speech that consistency of Government policy is essential for investors to have confidence in the economic profile of the industry.

Three weeks ago, Centrica warned that its annual earnings would fall short of City forecasts because of tougher trading conditions at its business supply operations.

The company, along with the UK’s other ‘Big Six’ residential gas and electricity retailers, are likely to issue statements responding to the series of Government announcements, which are expected at 7.00 on Monday morning.

George Osborne, the Chancellor, confirmed this weekend that reforms would lead to about £50 being cut from the average customer’s annual bill, adding that homebuyers would be provided with additional incentives to make their properties more energy-efficient.

Details of the £12-per-account electricity rebate, which will cost the Treasury £300m to deliver, and a new agreement between the Government and distribution network operators such as National Grid to reduce bills by a further £5, were revealed by Sky News on Saturday.

The Department of Energy and Climate Change declined to provide further details of the changes ahead of the announcements.

Centrica Boss: 'We Act In National Interest'