Advertisement
UK markets closed
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • FTSE 250

    19,884.73
    +74.07 (+0.37%)
     
  • AIM

    743.26
    +1.15 (+0.15%)
     
  • GBP/EUR

    1.1705
    +0.0011 (+0.09%)
     
  • GBP/USD

    1.2639
    +0.0017 (+0.13%)
     
  • Bitcoin GBP

    55,630.16
    -889.67 (-1.57%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • CAC 40

    8,205.81
    +1.00 (+0.01%)
     

National Grid raises guidance as it cashes in on energy price surge

National Grid
Nationa Grid expects underlying profits in its UK business to be above the guidance given in November last year. Photo: Getty (Getty Images via Getty Images)

National Grid (NG.L) has upgraded its profit forecasts after cashing in on the recent energy price inflation.

The announcement came as UK inflation hit a 30-year high of 7% in the year to March, up from 6.2% in February.

The company said it expects underlying profits in its UK business to be above the guidance given in November last year, ahead of its full earnings announcement in May.

Profits at the utilities giant's British electricity transmission and distribution units jumped higher than expected in the year through March 2022. Profits at National Grid's other businesses are projected to be in line with the forecast.

ADVERTISEMENT

National Grid is also working on a number of deals, including its sale of a majority share in its gas transmission arm is expected to close later in 2022.

The price cap on energy bills went up again in April, soaring 54%, while a further rise is expected at chancellor Rishi Sunak's next budget review in October.

According to National Grid, customers pay an average of £20 ($26.21) a year, or around 3.3% of their total bill, to the company as part of an electricity transmission charge. The charge, which covers the cost of building and maintaining the network, is subject to market regulator Ofgem.

The company came under fire in March after selling a large share of the UK's gas pipeline to foreign investors for over £4bn.

Shares in National Grid rose 5.9% in afternoon trade on Thursday in London.

Britain Power prices have surged in the past year, driven by an increase in the cost of natural gas (NG=F) as the nation become more reliant on gas for electricity in a bid to phase out use of coal-fired plants.

Crude and gas prices surged 37% and 90% respectively since the start of this year, leading to a £693 rise a year in the energy price cap in April.

As Russia's invasion of Ukraine has forced several EU countries to reduce reliance on Russian supply, the grid operator said that the UK will have enough gas to meet demand from April to September.

National Grid said that Britain will ship gas to Europe to help top up supplies on the continent. The UK only gets around 3% of its gas from Russia, while the EU relies on the Kremlin for around 40% of its needs.

It said total UK gas demand is forecast at 34 billion cubic metres (bcm) in the six months over the summer, compared to 31.9 bcm in the same period of last year. The supply, which mainly comes from the North Sea and Norway, is forecast at 34 bcm compared to 31.5 bcm in 2021.

Read more: BP makes £3m profit in three months as millions face nightmare gas and electricity bills

In February, BP (BP.L) announced a £9.5bn profit on the back of rebounding fossil fuel prices, prompting some ministers to call for a windfall tax on energy firms.

Profits at the energy giant reached $4.1bn (£3bn) the final quarter of the year, with analysts noting that the oil stalwart's profits are the equivalent to £378 a second in the final three months of last year.

The bumper results were driven by soaring demand for oil and natural gas which is leading to huge increases in energy bills for millions of households.

Watch: Why are gas prices rising?