Shares in Centrica gain 0.5 percent, outperforming a weak FTSE 100 index, after the utility, late on Friday, becoming the second of Britain’s six largest energy suppliers to increase energy tariffs this summer due to rising wholesale power and gas prices.
Centrica, which owns Britain’s largest energy supplier British Gas, said it will raise domestic tariffs for gas by an average of 18 percent, and for electricity by an average of 16 percent, on August 18 2011, an increase which will affect nine million British energy users “Rather than get mad at the price hikes, perhaps it is time for British Gas customers to get even and buy Centrica shares, which will no doubt benefit from the latest steep rises in gas and electricity prices,” Andrew Gibson, Head of Research at Galvan Research and Trading, says.
“Even more importantly, the move reveals that British Gas can essentially charge what it likes in current conditions, and until the Government moves to cap consumer price increases, this should underpin the stock price and group profits for some time to come,” Gibson adds.
Gibson also notes that Centrica shares have broken through their 200-day moving average level of 326 pence, a strong technical signal.
“While supported around this zone, we expect a retest of the February 2011 resistance zone through 350 pence”, he says.
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