Centrica shares tumbled 6.01% to 190.05p after the company disclosed that British Gas had reached a settlement with UK energy regulator Ofgem to resolve a longstanding probe into the installation of prepayment meters in the homes of vulnerable customers.
The regulatory action relates to activity carried out between February 2018 and February 2023, during which customers had prepayment meters installed under warrant without what Ofgem has described as adequate safeguards. As part of the agreement, British Gas will make a £20 million contribution to Ofgem’s voluntary redress fund and will write off up to £70 million of energy debt for customers identified as vulnerable.
The combined financial elements of the settlement - the redress fund payment plus the potential debt write-offs, amounting to as much as roughly £90 million - appeared to weigh on investor sentiment, prompting the pronounced selloff in Centrica's stock.
Company leadership addressed the issue directly. Centrica's chief executive, Chris O’Shea, said: "What happened should never have happened," and added that when the problems emerged the company "stopped the activity immediately and took rapid action to improve our processes and change how we engage with customers in debt, particularly those in vulnerable situations." The company also indicated that it does not expect the settlement to affect its 2026 financial guidance.
On the analyst front, JPMorgan kept Centrica at Overweight but reduced its price target to £2.35 from a previous £2.45, signaling diminished short-term upside conviction from that firm. Despite Centrica's guidance comment, the market reaction signaled that investors were not fully reassured by management's assessment of the financial impact.
While the settlement brings formal resolution to a long-running investigation, it also highlights the regulatory and reputational risks energy suppliers face when customer protections are judged to have been inadequate. The immediate market response reflects a combination of the tangible cost of the agreement and the reputational consequences that remain for the business and its brand.
Key details:
- Share movement - Centrica stock fell 6.01% to 190.05p following the settlement announcement.
- Settlement components - £20 million payment to Ofgem’s redress fund and up to £70 million in energy debt write-offs for vulnerable customers.
- Period under investigation - February 2018 to February 2023.