By Stefan Bienkowski
Political debate over energy prices is damaging to the nation and could threaten future supply, according to Centrica’s chairman.
Rick Haythornthwaite, chairman of the energy company that own British Gas, warned last week that any prospects of a 20-month freeze on energy prices could limit investment and create ‘uncertainty’ if pushed forward after the 2015 elections.
In the midst of market reviews from Ofgem, the Office of Fair Trading and the Competition and Markets Authority, Mr Haythornthwaite stated that the discussion regarding such action was “immensely damaging not just for Centrica but for the nation”.
The former Network Rail head who took up the role just last month, restarted the fight by stating that it would hit investment in the company hard and that by 2015 “the possibility of the lights going out in Britain will be looming much larger” and that this was not “the figment of a scaremonger’s imagination”.
His remarks comes in light of Ed Miliband’s continued pledge to halt any hikes in energy prices for the best part of two years if Labour win the next general election.
Speaking on BBC One’s Andrew Marr Show, shadow energy secretary Caroline Flint responded: “I think Centrica is scaremongering on this issue. I don’t think the price freeze is going to contribute to the lights going out.”
Before adding; “Do they like the price freeze? No, of course they don’t. This is about making sure we can give something back and where the price freeze can settle the market.”
The news follows an announcement earlier this month from Energy Secretary Ed Davey in which he stated that British Gas may have to be split up due to its monopolistic tendencies and huge profits in the gas market.
In a letter to the head of energy regulator Ofgem, Davey stated that the government were considering options to overcome any unfairness in pricing “including a break up of any companies found to have monopoly power to the detriment of the consumer.”
The comments have affected the parent company’s market price with shares dropping down 2.2 percent at 307 pence following Davey’s announcement, having sunk as low as 302-1/2p, their lowest since mid 2012.
Late last week British Gas reported a minor drop in 2013’s profits due to wholesale energy cost increases and warmer weather in the summer. While adjusted operating profit for the full year came in at £571m, down six percent on the £606m recorded a year earlier. Centrica also posted a dip in profits, at £2.7bn, down from £2.74bn.
British Gas did state that they felt they needed an operational profit margin of around five percent to make investments, secure energy supplies and to remain competitive in the market.