Centrica Benefits from Colder UK Winter

UK energy supplier Centrica said in trading update ahead of its AGM later on May 14 that overall financial performance has been good in the year to date. Colder than normal weather has increased energy demand and the significant commodity price volatility we have experienced has been managed well by its supply and trading business.

Centrica lost a further 62,000 residential customer accounts in January-April 2018, a slower rate of loss than in early 2017, it said, cautioning that the market remains competitive but that it had seen  some growth from business customers. It assumes a temporary price cap, set by regulator Ofgem, will be in place at the end of 2018.

Full year 2018 production from its 69%-owned upstream venture Spirit Energy, is “now expected to be in the lower half of the 2018 targeted range of 50-55mm barrels of oil equivalent as a result of unplanned outages at Morecambe Bay” and production issues on some non-operated fields in Norway. Meanwhile flow test results from Spirit’s appraisal well on Fogelberg offshore Norway are due later this month.

Centrica Storage's Rough asset “continues to deliver strong production and is now expected to deliver 2018 full year production in the range 9-11mmboe, ahead of original expectations”; the offshore storage facility is closing and Centrica is now withdrawing its remaining cushion gas.

Nuclear power generation will be lower than forecast in 2018, due to a recently announced extended outage at one of the reactors at Hunterston B, near Glasgow. Earlier this year Centrica said it plans to divest its 20% stake in British Energy, which owns Hunterston and seven other UK nuclear power plants, by end-2020; the remaining 80% is owned by French EDF; it gave no fresh update May 14 on this.