British Gas shares fell by 3.7% yesterday morning, following Davey’s suggestion that it could be broken up to avoid a near monopoly in the energy sector.
The company issued a response to Davey’s comments in which it underlined its considerable energy investment s in the UK (£60bn) and said it could only manage this level of commitment by continuing to make a profit.
Managing Director of British Gas Chris Weston, said: “In the last six years we have invested £13.7bn”.
He added that the company employs 30,000, pays £1bn in tax and invests “£1.85 for every £1 earned”.
Timing of comments questioned
Energy UK, the energy industry trade body, questioned the timing of Davey’s accusations and pointed out the figures he was referring to had long been in the public domain.
A spokesperson for Energy UK added: “The large energy companies already provide the regulator with a full breakdown of their business costs and operating margins”.
Centrica, British Gas’ parent company, has already seen its share price fall by close to 25% following Labour leader Ed Miliband’s promise to freeze gas and electricity rates should he win the next general election.
Consider ‘break-up of any companies found to have monopoly’
The news stems from a letter addressed to energy regulator Ofgem, in which Davey highlighted his concerns over British Gas making five times more margin on gas than on electricity. He added that British Gas tended “to charge one of the highest prices over the past three years, and has been on average the most profitable”.
Davey stated that the energy supplier currently makes an 11.2% profit on gas, a figure which he considers too high. He added that regulators should consider all options at their disposal including breaking up the company.