|Public limited company|
|Traded as||LSE: CNA|
FTSE 100 Component
|Founded||February 17, 1997|
|Headquarters||Windsor, England, UK|
(Group Chief Executive)
|Revenue||£29.686 billion (2018)|
|£1.392 billion (2018)|
|£0.242 billion (2018)|
Centrica plc is a British multinational energy and services company with its headquarters in Windsor, Berkshire. Its principal activity is the supply of electricity and gas to businesses and consumers in the United Kingdom, Ireland and North America.
It is the largest supplier of gas to domestic customers in the United Kingdom, and one of the largest suppliers of electricity, operating under the trading names Scottish Gas in Scotland and British Gas in England and Wales. It owns Bord Gáis Energy in Ireland. It is also active in the provision of household services including plumbing.
The company has its historical origin in the Gas Light and Coke Company which incorporated in 1812. Over the next 137 years, it grew by acquisition of other gas companies to become the primary supplier of gas to Greater London. In 1949, under the Gas Act 1948 the ownership of the company transferred to a government agency, North Thames Gas Board. The various area gas boards were merged into the national British Gas Corporation in 1973. The Gas Act 1986 sold the company to private investors as British Gas plc.
Centrica became a separate, distinct corporation on 17 February 1997, when British Gas plc split (demerged) to form three separate companies: Centrica plc, BG plc and Transco plc. Centrica took over gas sales and gas trading, services and retail businesses, together with the gas production operations in the North and South Morecambe gas fields (Rampside Gas Terminal).
In 1998, Centrica's supplier monopoly for gas came to an end. Centrica maintained the British Gas retail brand but is only allowed to use this brand name in the United Kingdom. The electricity market also opened up to competition and, through the British Gas brand, the company started supplying its first domestic electricity customers.
1998 to 2010
At the end of 1998, under CEO Sir Roy Gardner and Finance Director Mark Clare, Centrica attempted to diversify – firstly by developing the Goldfish credit card, then in July 1999, by acquiring the AA for £1.1 billion. In July 2001, Centrica further diversified with the opportunistic purchase of OneTel in the United Kingdom, a residential telecoms operator.
Soon afterwards, Centrica acquired the Dyno franchise group (best known for its Dyno-Rod drains unblocking service). Centrica also moved into the North American energy supply market, through the acquisition of the Canada based company Direct Energy in July 2000, for £406 million. Direct Energy's operations were subsequently considerably expanded through a number of further acquisitions, including of Enbridge Services for £437 million in January 2002.
This strategy of diversification changed in the middle of 2003, possibly under pressure from major city shareholders to deliver better returns and/or possibly anticipating pressure on the core energy supply business. The change of strategy started with the sale of the Goldfish business to Lloyds TSB Bank (who subsequently sold it to Morgan Stanley Bank International Limited).
Then, in July 2004, Centrica sold the AA to two private equity firms; Luxembourgish CVC and British Permira for £1.75 billion. Centrica then acquired Dyno-Rod in October 2004. Then, in December 2005, Centrica sold their OneTel business to Carphone Warehouse.
Since 2005, Centrica has declared a strategy of consolidating within the energy sector, upstream and downstream, including expanding operations overseas. New chairman Roger Carr replaced retiring chairman Sir Michael Perry in 2005, whilst new CEO Sam Laidlaw picked up the reins from retiring CEO Sir Roy Gardner in March 2006.
In January 2006, it was rumoured that the Russian state owned utility company Gazprom was seeking a takeover of Centrica. This created controversy in the media, while the Department for Trade and Industry stated any deal would be subject to "intense scrutiny". Tony Blair announced in April that he would not block any potential deal.
In September 2008, the company acquired the Caythorpe gas producing field near Bridlington to use for storage purposes. It also agreed to buy 20% of British Energy from EDF, financing this with a £2.2 billion, 3 for 8 rights issue. The rights issue offered shares at 160 pence per share and closed on 12 December 2008. In August 2009, Centrica took over Venture Production, a North Sea gas producer.
2010 to present
On 13 June 2010 Centrica, through Direct Energy, acquired Clockwork Home Services. Combining with the existing energy offer made Centrica the largest provider of heating and cooling, plumbing and electrical services in North America. On 17 November 2010, Centrica acquired the assets of heat pump installation company Cool Planet Technologies Ltd. for £0.5 million in cash. This aimed to boost the company's strategy of developing a broad range of low carbon technologies and advice.
In February 2011, Centrica signed a £2 billion three year contract with Qatargas for the purchase of 2.4 million tonnes a year of liquefied natural gas. In March 2011, Centrica agreed the sale of the electricity and gas supply business of its Netherlands-based subsidiary Oxxio to Eneco BV for €72 million (£63 million) in cash. The sale completed Centrica's exit from the supply of electricity and gas in Continental Europe, following the earlier disposal of its supply businesses in Belgium and Spain.
In November 2011, Centrica agreed to buy $1.6 billion stakes of 8 fields on the Norwegian continental shelf from Statoil ASA. In a second deal, Centrica agreed to buy 5 billion cubic meters a year gas from the same company from 2015 to 2025 as equal to 5% of gas consumption in the United Kingdom. Centrica's Germany based trading division Centrica Energie GmbH was closed in April 2012.
In July 2013, it was announced that Centrica would acquire the energy marketing unit of Hess Corporation for $1.03 billion. In March 2014, Centrica acquired the retail arm and other assets belonging to Ireland's state owned Bord Gáis for a fee of around €1.1 billion.
In 2010, Centrica entered into joint venture arrangements with Tullow Oil to explore for oil in the South Lokichar Basin in Kenya. In August 2014, Tullow, the operator, revealed significant oil discoveries had been made in the Etom 1 exploration well and testing block 10BB, which expanded the already proven South Lokichar Basin "significantly northwards," taking in an additional 247sq km.
In February 2015, in light of significantly changed circumstances, a fundamental strategic review was launched. This focused on outlook and sources of growth; portfolio mix and capital intensity; operating capability and efficiency; and Group financial framework. The review was a thorough and rigorous analysis of the Group's prospects, led by Centrica's senior management. It concluded that Centrica's strength lay in being a customer-facing business and that all activities and priorities would focus on meeting customers' changing needs. The shape of the Group would be reworked to reflect this, including a Group-wide efficiency programme that would reduce employee numbers by around 6,000.
Also in February 2015, under its British Gas brand, Centrica completed the acquisition of AlertMe, a connected home company based in the United Kingdom that provided innovative energy management products and services. In November 2015, Direct Energy also acquired Panoramic Power, a provider of device level energy management technology, for $60 million (£39 million).
In April 2016, Centrica acquired Neas Energy A/S (Neas), one of Europe's providers of energy management and revenue optimisation services for decentralised third-party owned assets. It also acquired ENER-G Cogen International Limited ("ENER-G Cogen"), an established supplier and operator of combined heat and power (CHP) systems and REstore NV, Europe's demand response aggregator.
In June 2017, it was announced that the CQ Energy Canada Partnership, the Canadian E&P joint venture in which Centrica plc owned a 60% interest, was to be sold to a consortium comprising MIE Holdings Corporation, The Can-China Global Resource Fund and Mercuria for a purchase price of C$722 million (£413 million) in cash.
On 21 June 2017, the company agreed to sell its operational Langage and South Humber Bank combined cycle gas turbine power stations, with a combined capacity of 2.3GW, to EP UK Investments Ltd for £318million in cash.
On 11 December 2017 Centrica launched Spirit Energy as a joint venture with German energy and infrastructure firm Stadtwerke München (SWM).
In December 2017, the Competition & Markets Authority agreed to grant Centrica plc and Centrica Storage Limited's (CSL's) request to be released from the Rough Undertakings. CSL decided that it could no longer operate Rough as a storage facility as the facility was no longer capable of safe injection operations due to the age and condition of the asset, and that due to the economics of seasonal storage and the cost of refurbishing or rebuilding the facility, neither pathway would be economic.
Centrica's operations are principally focused on the supply of electricity and gas to businesses and consumers in the United Kingdom and North America. They are organised as follows:
- Businesses in the United Kingdom, including British Gas which supplies gas, electricity and services to residential and business customers
- Distributed Energy & Power which supports large energy users
- North America Business including Direct Energy which supplies gas, electricity and services to residential and business customers
- Energy Marketing & Trading which provides risk management services
- Central Power Generation, which has a 20% interest in 8 power stations
In May 2009, Centrica purchased a 20% stake in nuclear power generator British Energy from EDF Energy. The company now produces 14.3% of its electricity from nuclear plants (the second highest rate in the United Kingdom), helping it to achieve the lowest carbon emissions of the major providers. Centrica has also acquired an option to purchase a 20% stake in EDF's subsidiary, NNB Generation Company (NNB GenCo).
In December 2017, Centrica launched a new company as a joint venture with German energy and infrastructure firm Stadtwerke München (SWM). Spirit Energy, an exploration and production (E&P) company, is the result of a combination of Centrica's E&P business and Bayerngas Norge AS, which was formerly majority-owned by SWM. Centrica plc owns 69% of Spirit Energy, with Bayerngas Norge's former shareholders, led by SWM and Bayerngas GmbH, owning 31%.
Sam Laidlaw was the chief executive of Centrica between 1 July 2006 and 31 December 2014. In the financial year of 2010, Laidlaw received a total compensation of £1,841,000 from Centrica, comprising a salary of £941,000 and a bonus of £900,000.
Iain Conn was appointed Group Chief Executive of Centrica on 1 January 2015. Iain was previously BP's chief executive, downstream (BP's refining and marketing division), a position he held for seven years.
British Gas was accused of greenwashing in the advertising of its Zero Carbon tariff in January 2008, after the Advertising Standards Authority upheld a complaint about the 'greenest domestic tariff' claim.
Customer complaint response
Ofgem found that British Gas failed to re open complaints from customers who indicated they felt the matter was not resolved adequately, failed to provide sufficient information to complainants about the energy ombudsman service, and failed to deal properly with complaints from micro businesses because it had not implemented the necessary processes and practices.
A spokesperson for British Gas said the company felt that finding it in breach of rules for failing to provide adequate information to consumers about the energy ombudsman was "disproportionate to the mistake".
British Gas Business was fined £1 million in July 2011 after Ofgem's investigation found the company had misreported the amount of electricity supplied under the British government's renewables obligation. British Gas claims it spotted the problem – it said an over-reporting of the amount of renewable energy it was supplying caused by human error – and notified the regulator.
Centrica entered the political arena in February 2014, by threatening an investment strike in response to the Labour Party's proposal for a price freeze. Caroline Flint, the shadow energy secretary, said: "It is not acceptable for companies to threaten that the lights will go out because they don't want greater transparency, competition and accountability".
Centrica has also funded, in conjunction with Cuadrilla Resources, the North West Energy Task Force which on 8 January 2015 organised an Open Letter to Lancashire County Council in support of fracking. This letter was signed by Jane Watson, sister of Robert Altham, the judge who sentenced three anti-fracking protesters to jail in September 2018.
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