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British Gas under pressure after profits boost

The energy sector is again in the limelight with news that British Gas made profits of £595 million in 2009, an increase of 58% on the corresponding period. The company is part of the Centrica group which is a major component of the UK energy sector. This large jump in profitability comes just days after Ofgem, the industry regulator, revealed expectations of record profits in the UK energy sector for 2009.

Many people believe that energy companies such as British Gas have been slow to pass on reductions in wholesale gas prices to consumers and businesses in the UK. As a consequence, the profit per customer has increased significantly over the period with concerns that many in the UK are still not benefiting from the overall fall in wholesale gas prices. It will be interesting to see what the government and the regulator do after these figures which are very impressive when you also consider the current economic environment.

The UK banking sector and the UK energy sector appear to be laws unto themselves at the moment with the UK government and regulators threatening to take action but ultimately limited in what penalties they can hand out and what restrictions they can enforce.

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