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Four burning rings on a gas cooker
Centrica’s chief executive does not believe increasing the domestic supply of gas from the North Sea will help to solve the energy crisis. Photograph: Mark Sykes Energy And Power/Alamy
Centrica’s chief executive does not believe increasing the domestic supply of gas from the North Sea will help to solve the energy crisis. Photograph: Mark Sykes Energy And Power/Alamy

Centrica boss says high energy bills could last two years

This article is more than 2 years old

Chris O’Shea says rising global demand for gas partly being driven by transition away from coal and oil

The boss of the UK’s largest energy supplier has said rocketing energy prices, which are adding to the soaring cost of living for British households, could last for as long as two years.

Chris O’Shea, the chief executive of British Gas owner Centrica, said the energy market “suggests that high gas prices will be here for the next 18 months to two years”.

O’Shea told the BBC there was no reason to think that gas prices would start to fall again “any time soon”.

The rising global demand for gas is partly being driven by the energy transition, according to O’Shea, as countries move away from reliance on coal and oil.

“As we move towards net zero, gas is a big transition fuel, so as you turn off coal-fired power stations in other countries, maybe there is more demand for gas,” O’Shea said.

“There isn’t an abundance of gas that you can just turn on quickly, so I can’t say that this will be done in six months, or nine months, or a year.”

However, O’Shea said he did not believe that increasing the domestic supply of gas from the North Sea would help to solve the energy crisis.

“I’m not sure an increase in UK supply would have brought the price down from £3 a therm, as it was in December, from 50p as it was a year ago,” he said.

“We bring gas in from the United States, from Norway, from Europe, from Qatar, from other places. So we’re not in a position to simply have the UK as an isolated energy market. We are part of a global market.”

Consumers are bracing for a jump in what they pay for household energy in April, after the regulator reviews its energy price cap. Many expect Ofgem’s decision will lead to average bills soaring by as much as £700, taking the annual cost of electricity and gas for households on a supplier’s default tariff to £2,000.

O’Shea, who has headed Centrica for almost two years, recently called on the government to help out struggling consumers by cutting VAT on energy bills, or stripping environmental levies from bills.

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According to O’Shea’s calculations, the VAT cut would shave £100 off the average annual bill. However, this move has been dismissed by the prime minister, Boris Johnson.

O’Shea also suggested that the government should fund environmental and social levies through general taxation instead of household bills, which he estimated would cut the average annual total by £170.

Last year 26 UK energy firms collapsed, and O’Shea has previously said that energy companies would have to pass on higher wholesale costs in order to survive, although he has insisted that Centrica would not want to receive a government bailout to help it keep bills down.

O’Shea’s comments came as the chief executive of rival supplier, Ovo Energy, apologised for what he described as a “ridiculous” email sent to customers, advising them to cuddle their pets, eat “hearty bowls of porridge”, or do “a few star jumps” to lower their heating bills.

Stephen Fitzpatrick, Ovo Energy’s founder and chief executive, blamed an employee for sending out the email, which he called “embarrassing”, adding that it “should never have been written”.

“Somebody had a bad day and they sent out an email and the truth is, we should have caught it,” Fitzpatrick told BBC Radio 4’s Today programme on Wednesday.

“I think it was probably meant with good intentions, but this is the kind of message that causes many customers a lot of upset.”

Fitzpatrick said he was not expecting wholesale energy prices to fall until 2023 and called on the government to announce measures to ease the energy crisis.

The UK’s third-largest energy supplier sent the email on Monday to customers of its SSE Energy Services, which Ovo acquired in 2020.

The company was widely criticised for the tips on how to stay warm during the winter – described as “insulting” and “offensive” by MPs – which came at a time when millions of households are worrying about how they will cope with a significant increase in their energy bills.

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