Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  London Stock Exchange  >  Centrica    CNA   GB00B033F229

CENTRICA (CNA)
Mes dernières consult.
Most popular
  Report  
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsofficial PublicationsSector newsTweets
OFFRE ETE Zonebourse : Jusqu'à 6 mois offerts sur tous les portefeuilles

UK energy companies left in dark over price cap plan

share with twitter share with LinkedIn share with facebook
share via e-mail
0
10/05/2017 | 01:10pm CEST
Britain's Prime Minister Theresa May holds up a cough sweet after suffering a coughing fit whilst  addressing the Conservative Party conference in Manchester

LONDON (Reuters) - A British government plan to cap prices has wiped hundreds of millions of pounds off the value of household energy suppliers but details are scant and doubts remain about its implementation.

Prime Minister Theresa May said on Wednesday that a cap would be imposed on standard variable tariffs (SVT), the basic rates that suppliers charge if a customer does not opt for a specific payment plan for gas and electricity.

Under the proposals, energy market regulator Ofgem would be responsible for setting the new cap which would be a temporary measure kept under review.

In July, Ofgem had said it would consider a safeguard tariff for vulnerable customers but stopped short of committing to a wider price cap.

May's announcement sent shares in the biggest energy supplier Centrica (>> Centrica), the owner of British Gas, to a near 14-year low and shares in SSE (>> Scottish and Southern Energy), the second biggest, fell by 3 percent.

Shares have since recovered slightly and Wednesday's reaction was seen as a knee-jerk response to the confirmation of intervention in the energy market.

There are still doubts about whether the plan will be implemented following calls from Centrica as well as rivals Scottish Power and E.ON for SVTs to be scrapped. Questions about May's political tenure further cloud the picture.

Centrica boss Iain Conn said the industry should be forced to work harder to win new customers through competition.

"We do agree the market needs further structural changes," he told BBC Radio.

"We just don't support price caps. There is clear evidence that they don't work, in New Zealand, in Spain, in California, in Ontario. They tend to limit choice, reduce competition and prices tend to bunch around the cap."

DETAILS MISSING

Energy bills have doubled in Britain over the past decade to an average of about 1,200 pounds ($1,500) a year, putting the biggest providers in the sights of politicians.

The market is dominated by the so-called big six providers -- Centrica's British Gas, SSE, Iberdrola's (>> Iberdrola) Scottish Power, Innogy's npower (>> Innogy SE), E.ON (>> E.ON) and EDF Energy (>> Electricité de France).

Due to the lack of substance, it is difficult to predict the ultimate impact on energy companies' bottom line. The full impact of a price cap will depend on the depth of the price cuts and how long they remain in place.

"We don't know how it would be introduced, what market it will cover or what the legislation will look like," said Ahmed Farman, equity analyst at investment bank Jefferies.

"If a price cap were introduced along the lines of the pre-payment price caps and covered the whole of the SVT market, it would have a significant impact on SSE and Centrica," he added.

Energy market regulator Ofgem is already in consultation on a measure which would impose a price cap on prepayment meters for the most vulnerable households, which could form the basis for a wider cap, analysts say.

"(For Centrica), the operating profit impact could be as much as 110 million pounds – some 7 percent of operating profit – but legislation will take time to be enacted and Centrica management has said that it will take mitigating action to offset reduced revenues," HSBC analysts said.

A price cap of 1,100 pounds a year would still allow efficient firms to make a margin but a 1,000 pound per year cap would "push the industry into a loss of 700 pounds million," said analysts at Bernstein.

(Reporting by Nina Chestney; Editing by Keith Weir)

By Nina Chestney

Stocks mentioned in the article
ChangeLast1st jan.
E.ON -0.01% 9.096 Delayed Quote.0.39%
ELECTRICITÉ DE FRANCE 0.47% 11.86 Real-time Quote.7.63%
IBERDROLA 1.43% 6.526 End-of-day quote.-0.40%
INNOGY SE -0.08% 36.72 Delayed Quote.12.38%
SCOTTISH AND SOUTHERN ENERGY 1.35% 1351 Delayed Quote.0.98%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on CENTRICA
06/22CENTRICA : Passion for a hands-on career
PU
06/21CENTRICA : Working at the forefront of innovation
PU
06/21CENTRICA : highlights the untapped potential of technology in British homes
PU
06/19Engie sees British customer base and profitability growth - UK CEO
RE
06/19CENTRICA : Challenging stereotypes for a rewarding career
PU
06/18WOMEN IN ENGINEERING : Meet Nicola McCheyne
PU
06/16Centrica, Tokyo Gas break mould in Mozambique LNG deal
RE
06/15CENTRICA : Riding the wave of a rapidly changing world
PU
06/14CENTRICA : UK Centrica CEO expects to maintain current dividend level
RE
06/13CENTRICA : Juggling a career with caring responsibilities
PU
More news
News from SeekingAlpha
06/08Why Contrarian Value Investing Is Both Agony And Ecstasy 
05/10Centrica's 8% Dividend Yield Means It's Priced For Energy Armageddon 
04/07DIVIDEND DOGS WITH MORE BITE : How To Hunt For High Yield Large-Cap Shares 
02/23Centrica's (CPYYF) CEO Iain Conn on Q4 2017 Results - Earnings Call Transcrip.. 
02/22Centrica Plc 2017 Q4 - Results - Earnings Call Slides 
Financials ( GBP)
Sales 2018 28 443 M
EBIT 2018 1 479 M
Net income 2018 633 M
Debt 2018 3 117 M
Yield 2018 7,60%
P/E ratio 2018 11,87
P/E ratio 2019 12,60
EV / Sales 2018 0,42x
EV / Sales 2019 0,42x
Capitalization 8 863 M
Chart CENTRICA
Duration : Period :
Centrica Technical Analysis Chart | CNA | GB00B033F229 | 4-Traders
Technical analysis trends CENTRICA
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 18
Average target price 1,53  GBP
Spread / Average Target -3,4%
EPS Revisions
Managers
NameTitle
Iain C. Conn Chief Executive Officer & Director
Richard Neil Haythornthwaite Chairman
Jeff Bell Group Chief Financial Officer & Director
Mike Young Group Chief Information Officer
Mark Hanafin Group Executive Director & CEO- Centrica Business
Sector and Competitors
1st jan.Capitalization (M$)
CENTRICA15.08%11 756
ELECTRICITÉ DE FRANCE7.63%41 412
ENGIE-7.57%37 319
NATIONAL GRID PLC-4.70%37 128
SEMPRA ENERGY7.69%30 413
ORSTED11.07%24 809