Ed Davey suggested British Gas had charged one of the highest prices to domestic customers in the last three years. Photograph: Getty Images.
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Six questions answered on Centrica's share price fall after suggestions British Gas could be broken-up

Why is Ed Davey investigating British Gas’s profit margins?

British Gas owner, Centrica, suffered a fall in share price today after the UK energy secretary investigated its profit margins and suggested the company may have to be broken up. We answer five questions on the potential break-up of British Gas.

By how much has Centrica’s share price fallen?

The share price fell by 3 per cent today after energy minister Ed Davey questioned the company’s dominance in the market. British Gas currently has 41 per cent of the domestic gas supply market in the UK, the largest share of any of the so-called "big six".

Why is Ed Davey investigating British Gas’s profit margins?

Davey said in a letter that profit margins made by the "big six" energy suppliers when supplying gas were actually higher than previously thought. In particular, he highlighted the high profit margin of British Gas and its large market share. He added that British Gas had charged one of the highest prices to domestic customers in the last three years.

He estimated that if gas margins were similar to electricity households would save on average up to £40 a year. Davey also provided information that showed Centrica saw profit margins of 11.2 per cent for its gas business in 2012. He suggested a market investigation.

Why has Davey said British Gas may have to be broken-up?

If an investigation found evidence of a monopoly this could result in the company being broken-up. As well as asking the competition authorities to investigate the profit margins as part of an ongoing review, he has written to energy regulator Ofgem and the Competition and Markets Authority asking them to consider all possible avenues "including a break-up of any companies found to have monopoly power to the detriment of the consumer".

What else has Davey said?

Mr Davey told the BBC: "This is a significant issue for consumers out there who are struggling with their energy bills."

In his letter he says: "Analysis of the profit margins of the energy companies shows that the average profit margin for gas is around three times that of electricity.

"There is also evidence that British Gas, the company with the largest share of the gas domestic supply market, has tended to charge one of the highest prices over the past three years, and has been on average the most profitable."

What has British Gas said about Davey’s comments?

In its statement, British Gas said: "We welcome this and have complied with all the requests for data which we have received.

"The data referred to in the Secretary of State's letter has already been fully disclosed and in the public domain for a number of weeks."

What have the independent experts said?

Some have queried why this publicly available information hasn’t been investigated by Ofgem already.

However, Richard Lloyd, the executive director of the consumer rights group Which?, told the BBC the intervention was hugely significant and suggested Davey agreed with Which? that the structure of the biggest energy companies is partly to blame for the price hikes.

"It will now put huge pressure on the regulators, in a matter of weeks, to announce that they're taking the first steps towards potentially breaking up the very biggest of the big energy companies," he added.

Heidi Vella is a features writer for Nridigital.com

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Ignoring devolved nations on Brexit "risks breaking up the UK"

Theresa May is meeting with Scottish, Northern Irish and Welsh representatives. 

The Westminster government risks the break up of the union if it tries to impose a Brexit settlement on Scotland, Northern Ireland and Wales, the Institute for Government has warned.

On the day Theresa May is meeting with representatives from the devolved administrations, the thinktank said there were "worrying signs" the Tories were ignoring them instead of treating them like partners. 

The Institute urged the UK government to take steps to prevent "political spats from escalating into a full-blow constitutional crisis".

It stated:

"Imposing a Brexit settlement in the absence of consent from the devolved bodies may be legally possible, given that the UK Parliament remains sovereign. 

"However, this would run contrary to convention and to the spirit of devolution, which recognises the right of the three devolved nations to determine their own
form of government. 

"It would also be a reckless strategy for a government committed to the Union, since it would seriously undermine relationships between the four governments, and increase the chances of Scottish independence and rifts in Northern Ireland’s fragile power-sharing arrangements."

Instead, Brexit ministers from the devolved nations should be represented on a specially-created committee and held jointly responsible for the outcome of talks, it recommended. The devolved nations are expected to want a softer Brexit than the one outlined so far by Westminster. 

It noted that despite the Prime Minister's commitment to developing a "UK approach" to Brexit, there are "worrying signs" that the devolved governments are being ignored.

So far key decisions, such as the deadline for triggering Article 50, have been taken by Westminster alone. Legal experts have warned a stand off between devolved authorities and Westminster could lead to a constitutional crisis.

While civil servants across the UK are now trying to work together, the Institute for Government said their ability to do so "has been hindered by lack of agreement at a political level".

A Brexit settlement could also lead to new powers for the devolved nations, the report said, such as on employment and immigration.

The report said it was likely devolved parliaments would wish to vote on any settlement.

The Scottish First Minister, Nicola Sturgeon has already threatened to hold another independence referendum if Westminster does not take account of Scottish interests, and has pledged that the SNP will vote against the Brexit bill in Parliament. 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.