British Gas Sees Profits Slump Amid Customer Shift to Fixed Energy Deals
British Gas has reported a significant decline in its annual profits, largely driven by a growing number of customers switching to cheaper fixed-rate energy tariffs. According to Centrica, the owner of British Gas, approximately 32% of its customers are now on fixed-rate plans, up from 25% at the end of last year.
Impact on Financial Performance
The shift has resulted in a sharp fall in underlying operating profits, which dropped from £1.55 billion in 2024 to £814 million in 2025, as revealed in the company's annual results released on February 19, 2026. This represents a substantial decrease in earnings for the energy giant.
Fixed-rate energy tariffs lock in the cost per unit of gas and electricity, as well as the daily standing charge, for a set period, typically ranging from 12 to 24 months. This provides customers with price stability but reduces the revenue potential for suppliers like British Gas.
Expert Insights on Savings
Energy expert Suzanne Edwards from USwitch commented on the trend, stating, "The average household could save around £250 if they switch to the cheapest fixed deal on the market." This highlights the financial incentive for consumers to seek out more affordable options amidst ongoing cost-of-living pressures.
Centrica cited two primary factors for the profit decline: customers reducing their thermostat usage due to warmer weather and the increasing adoption of fixed-price deals. These elements have collectively impacted the company's bottom line.
Forecasted Energy Price Cap Reduction
In related news, the energy price cap is projected to fall by £117 to £1,641 annually for a typical dual-fuel household starting April 1, 2026. This forecast comes from Cornwall Insight, which released its final predictions following the closure of the observation window on February 17.
The new cap would mark a 7% decrease from the current level of £1,758 per year, offering further relief to consumers. This reduction is part of broader trends in the energy market, where fluctuations in wholesale prices and regulatory changes continue to influence household bills.
The combination of falling profits for British Gas and a lower price cap underscores the dynamic nature of the UK energy sector, with consumers increasingly taking advantage of competitive deals to manage their expenses.
