British Gas’ managing director Phil Bentley is expected to step down from his job after a bust-up over strategy.
Mr Bentley is understood to have differed with Sam Laidlaw, chief executive of Centrica - British Gas’ parent company - over a new strategy review that will be unveiled alongside results at the end of next month.
Although Mr Bentley has been very successful at improving British Gas’ customer service demands, it is thought Mr Laidlaw wants British Gas to focus on new ways to promote growth in the face of creeping regulation.
Mr Bentley’s departure would signify a “re-fresh” in the direction British Gas has to take over the next two years, but it is not thought that that the move will lead to other wide-sweeping executive changes.
Despite public fury over rising gas prices and household energy bills, Centrica (LSE: CNA.L - news) is unhappy with the level of margin squeeze on its post-tax retail margins. The company currently has a 5pc margin on post-tax gas income from households and has been subject to a lot of regulatory creep, including a series of interventions from Ofgem.
The last time that Centrica unveiled a new strategy review was in 2010, when the company said it wanted to focus on growing its upstream business, like oil gas production, in order to create a hedge for lower gas prices.
In the current climate, where there is little flexibility in price increases, British Gas has to look for a new ways to develop growth to ensure it remains competitive.
Analysts have suggested that the next stage of the company’s growth could come from an increase in household services, such as boiler homecare insurance, other markets or an improvement in its online platform.
Centrica, which has a market valuation of £18bn has two other divisions aside from British Gas: an oil an gas production business and a fast growing North American operation. Next (Other OTC: NXGPF - news) month’s review, expected at the same time as the preliminary results announcement on February 27, will look at how to divide future investment between these three divisions.
Mr Bentley, 53, joined Centrica as finance director 13 years ago. In 2007, he was transferred over to British Gas as managing director. The retail division provides power and electricity to 12m homes around the country and employs 31,000 people.
At the time of Mr Bentley’s appointment, British Gas had developed a poor reputation for customer services and was recovering from a botched new billing system. Much of that work is now done, with insiders attributing much of the success to Mr Bentley.
Last year he was paid £681,000 in salary. His shares and options are worth £6.7m and he has a £210,000-a-year pension pot. Mr Bentley’s replacement has not yet been finalised.
Centrica declined to comment and Mr Bentley could not be reached.