British Gas owner Centrica has blamed a big loss in 2019 on the energy price cap and falling gas prices.
Centrica made a loss of £849m in the year ended 31 December compared with a £987m profit the year before.
That sent the share price tumbling by 15% in early trading on Thursday.
Chief executive Iain Conn said: “It’s true that 2019 was going to be a difficult year, with the first year of the implementation of the price cap, and it did hit us by £300m”.
“But we also had the falling price of gas, which affected our North Sea businesses, which we’re selling,” Mr Conn said.
However, he added that its customer divisions “did well” in terms of underlying profits.
The price cap on electricity and gas bills came into effect in January 2019 and was a flagship policy of former Prime Minister Theresa May to end what she called “rip-off” prices.
Last week, energy regulator Ofgem told suppliers to cut average standard bills and pre-pay bills by 1.4% from 1 April as wholesale prices had fallen between August 2019 and January 2020.
Centrica, which has a 20% stake in Britain’s nuclear power stations, added that outages at two nuclear plants last year had also hit earnings.
Julie Palmer, partner at consultants Begbies Traynor said: “These latest results suggest Centrica is running out of gas, with the government’s price cap on energy bills, strong competition from start-ups and the search for a new chief executive hampering the firm’s performance.
“The energy supplier has had to cut tariffs for millions of its customers, leading to thousands of job losses as the company aims to reduce costs and improve its profitability.”
She said that investors will want to know the long-term strategy as the UK aims for net zero carbon emissions by 2050. “With Centrica’s stakes in numerous fossil fuel businesses, it will need to reshape its portfolio to get itself back on its feet,” Ms Palmer added.
Customers have been dropping away from the six biggest suppliers on the UK energy market, and experts hailed 2019 as the year that the group’s stranglehold on the market was finally broken for good.
Centrica’s rival SSE was bought by one of the smaller challengers, Ovo Energy, which only entered the market a decade ago. Ovo and other challengers spent the second half of the last decade stealing customers away from the bigger rivals, cutting Centrica’s market share from 24% when Mr Conn took over, to 19% towards the end of last year, according to figures from Ofgem.
“British Gas is really struggling with the onslaught from small suppliers, the price cap, and falling natural gas prices hitting them hard,” said Mark Todd, co-founder of Energyhelpline.