British Gas has announced huge profits of £571 million leading Energywatch to call for an investigation by the Competition Commission.

British Gas has announced 2007 profits of £571 million, compared with its 2006 profits of £95m. This announcement follows the news of the company’s price increases for customers of 15%.

Centrica, which owns British Gas, also reported overall group profits of £1,949m – up 40% from last year.

Following the announcement, Energywatch, the UK’s consumer watchdog for gas and electricity, has renewed its call for a probe by the Competition Commission into the rising profits of utility companies. Adam Scorer, Energywatch’s Director of Campaigns, said: “No one is going to argue that energy companies don’t need to make a profit. However, British Gas customers will want to tear their hair out when they hear the scale of these profits and compare them with their own rising bills.

“…It is perfectly true that there is volatility in wholesale energy markets. But it seems equally true that such volatility hits consumers not shareholders. Consumers will feel justified in claiming that they are being taken for a very rough ride by energy companies.”

The consumer organisation stated that a Competition Commission investigation could consider the fact that there are only six major utility companies – leaving small suppliers unable to penetrate that market – and consider why a £10 billion investment in gas infrastructure has apparently failed to create stability in gas supply.

Sam Laidlaw, Centrica’s Chief Executive, said of the group’s financial results: “2007 was a year of substantial achievement for Centrica during which we made further progress on addressing the key priorities for the business… The UK market is challenged by high wholesale energy prices which appear to be taking their lead from the oil-linked gas markets of continental Europe and our other markets are feeling the effects of weakening economic conditions.

“In this environment it is important that we remain single-minded in making our operations leaner and more efficient to give us the maximum chance of success both in the UK and internationally.”

Energywatch stated that British Gas is not the only utility company that is making a record profit. Scorer continued: “British Gas has to report on its profits and as a consequence takes the public hit. The problem is deeper than any one company. The problem is rooted in a market structure that constrains the benefits of real competition to consumers.”