Listen to this article
Centrica, the owner of British Gas, has lost 261,000 domestic customers so far this year, although it said the decline reflected a decision to focus on value, not just volume.
Explaining the drop, Britain’s biggest energy supplier to homes highlighted the end of certain “collective switch” deals, whereby a third party negotiates a better deal for a group of customers.
The “big six” energy companies have been battling to retain customers following a surge in independent, challenger brands. There are now over 40 domestic energy suppliers to home.
However, switching rates have not been sufficient to satisfy ministers that the market is functioning properly for customers. And the Conservative party is shortly expected to reveal further details of a proposed price cap on standard variable tariffs – the rate that affects two-thirds of households – in its manifesto.
Centrica said on Monday that evidence from other countries suggests a cap will “lead to reduced competition and choice, and potentially higher average prices”.
However, it said it will be “well-placed” to deal with whatever form of regulation comes its way, given its “focus on competitive pricing, cost efficiency, improved service levels, rewarding loyalty and delivering propositions which customers want.”
The group said it is on track to deliver a range of targets set out at the time of its annual results earlier this year, including generating adjusted operating cash flow of more than £2bn.
However, it cautioned that warmer than normal weather in the UK and the US so far this year has resulted in lower-than-expected energy consumption, while wholesale oil and power prices have all fallen since it last updated the market in February.
Chief executive Iain Conn said:
We continue to make good progress in implementing our customer-facing strategy, building on the underlying momentum we had as we entered 2017. Customer service is improving, we have launched new offers delivering choice for customers and rewarding loyalty and we continue to develop our technology capabilities. We remain on track to deliver against our 2017 targets.
Centrica has published its first quarter trading update ahead of its annual meeting in London on Monday.
Mr Conn received a near 40 per cent pay rise for 2016, boosted by higher bonuses and a “recruitment award” promised to him when he joined Centrica in 2015 from BP.
One top 20 shareholder told the FT any rebellion against Mr Conn’s pay was expected to be limited, although there was some “grumpiness” about the recruitment awards. Mr Conn was a “strong and good” hire from BP, where he was head of the oil group’s downstream business, the shareholder added.