Centrica
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| Centrica | |
|---|---|
 |
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| Type | Public (LSE: CNA) |
| Founded | 17 February 1997 |
| Headquarters |  Windsor, England, UK |
| Key people | Roger Carr Chairman Sam Laidlaw CEO |
| Industry | Utilities |
| Revenue | £16,342 million GBP (2007) |
| Operating income | £1,949 million GBP (2007) |
| Net income | £1,507 million GBP (2007) |
| Subsidiaries | See below |
| Website | www.centrica.com For consumers: www.britishgas.co.uk |
Centrica plc (LSE: CNA) is a large multinational utility company, based in the United Kingdom but also with interests in North America and Europe. It is part of the FTSE 100 Index of companies.
Contents |
[edit] History
Centrica was created in 1997 when British Gas plc demerged into Centrica plc and BG plc (later BG Group plc). The demerger grouped British Gas's gas supply, services, retail businesses and gas production business of the Morecambe gas fields under Centrica. Centrica is the largest supplier of gas to domestic customers in the UK, and one of the largest suppliers of electricity, operating under the trading names "Scottish Gas" in Scotland and "British Gas" in the rest of the UK.
In late 1998, under CEO (Sir) Roy Gardner and Finance Director Mark Clare, Centrica attempted to diversify - firstly by developing the Goldfish credit card, then in 1999 by acquiring the AA for £1.1 billion. In 2000 Centrica further diversified with the opportunistic purchase of OneTel in the UK, a residential telecoms operator. Soon afterwards Centrica also bought the Dyno franchise group (best known for its Dyno-Rod drains unblocking service).
This strategy of diversification changed from mid 2003. Possibly under pressure from major city shareholders to deliver better returns, and/or possibly anticipating pressure on the core UK energy supply business. The change of strategy started with the sale of the Goldfish business to Lloyds TSB Bank (who subsequently sold it to Morgan Stanley Bank International Limited). Then in 2004 Centrica sold the AA to two European private equity firms, CVC and Permira for £1.75 billion. Then in 2005 Centrica sold their OneTel business to Carphone Warehouse.
Since then Centrica has declared a strategy of consolidating within the energy sector, upstream and downstream, including expanding operations overseas. New Chairman Roger Carr replaced retiring chairman Sir Michael Perry in 2005, new CEO Sam Laidlaw picked up the reins from retiring CEO Sir Roy Gardner in 2006. Sam Laidlaw brings significant experience of 'upstream' operations, securing supplies of energy which can then be sold on through Centrica's consumer business. Former Finance Director for Centrica Phil Bentley has become Managing Director of the core Centrica business British Gas. Meanwhile Sir Roy Gardner has become Chairman of food services group Compass, and former Finance Director of Centrica and MD of British Gas Mark Clare has become CEO of Barrett Homes.
[edit] Divisions
[edit] Europe
- Luminus (Belgium)
- Oxxio (Netherlands)
- Luseo Energia (Spain)
- Centrica Energie GmbH (Germany)
[edit] Centrica North America
- Direct Energy
- Direct Energy Business Services
- WTU Retail Energy
- CPL Retail Energy
[edit] United Kingdom
- Centrica Energy
- Gas fields
- Power stations
- British Gas Services
- British Gas Residential
- British Gas (England & Wales)
- Nwy Prydain (Wales)
- Scottish Gas
- Dyno-Rod
- British Gas Business
- Centrica Storage
- Rough gas storage facility
- Newfield Exploration UK
[edit] British Gas
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The neutrality of this section is disputed. Please see the discussion on the talk page.(March 2008) Please do not remove this message until the dispute is resolved. |
.PNG)
Centrica plc, trading as British Gas (and as Scottish Gas in Scotland) is market leader in the supply of energy to UK households. In recent years the UK wholesale energy market has become more volatile, leading to increasing energy prices. Consequently the core residential energy business of British Gas has been running at a loss according to results released by parent, Centrica plc.
To help to manage price volatility, Centrica announced a variety of investments in new sources of supply that may help wholesale prices to come down in the future. During 2005, the company estimated that nearly £600 million was spent on new gas, power and renewable energy assets, with a further £400 million committed to help import more gas into the country.[1] Since 40% of electricity is generated by gas-powered stations, this investment was predicted to reduce the cost of electricity. In parallel British Gas announced in July 2006 that they intend to improve customer service.
By early 2007 market reports suggested that UK wholesale energy prices had stabilised and started to fall. In March 2007 Centrica's British Gas (and Scottish Gas) implemented the first price reductions in the UK residential energy market for six years, a move followed by other major energy suppliers. [2]. In late April 2007 British Gas again reduced prices, highlighting that some competitors had yet to reduce prices in 2007. Having suffered heavy losses of customers as prices were rising, British Gas claimed that the new environment of falling prices would allow them to grow their customer base. [3].
Meanwhile the EU is investigating alleged malpractice in the wholesale market for gas and electricity supply across Europe. Allegations include the suggestion that gas supplies to the UK are restricted, contributing to increases in the wholesale price of gas in the UK. The conclusions of a competition inquiry into the EU energy sector were published in December 2006.
The draft conclusions, published in February 2006, confirmed fears by Brussels that former state monopolies in the major European markets (not UK) were keeping a stranglehold on home markets, allowing them to control pricing - against the interests of consumers. Competition commissioner Neelie Kroes criticised excessive concentration in what she said reflects the "old market structure of national or regional monopolies".[4]
In May 2006, Kroes showed real commitment to addressing the issues by launching a series of surprise inspections at the offices of major power utilities in Germany, Italy, France, Belgium and Austria on suspicion of antitrust practices and abuse of dominant market position in the gas sector (E.ON, RWE, Gaz de France, Distrigas, OMV were among the companies targeted). [5] [6]
In the final report issued in January 2007 Kroes was highly critical of the lack of market conditions supporting competition [7] [8]
The wider European energy market has a direct influence on the operation of the UK market. This includes the sources of supply and the nature of competition. In contrast to the situation in Europe, the UK energy market is an open market in which British Gas competes with a variety of other suppliers - including Powergen and nPower which are subsidiaries of E.ON and RWE, respectively.
[edit] See also
[edit] References
- ^ "Centrica signs Drax supply deal", BBC © BBC 2006, April 11, 2006.
- ^ "British Gas cuts energy tariffs", BBC © BBC 2007, March 12, 2007.
- ^ "British Gas cuts its energy bills", BBC © BBC 2007, April 26, 2007.
- ^ "Energy firms 'holding back gas'", BBC © BBC 2006, Feb 16, 2006.
- ^ "Spanish energy tussle hots up", BBC © BBC 2006, Aug 7 2006.
- ^ "Centrica raps French gas merger", BBC © BBC 2006, May 21, 2006.
- ^ "Energy sector inquiry", European Commission © European Communities, 1995-2007, January 2007.
- ^ "Summary of Energy sector inquiry", European Commission © European Communities, 1995-2007, January 2007.
