* Any price cap impact more likely to occur in 2018 -CEO
* Political risks to continue weighing on Centrica shares
* Shares up 2.2 percent
* Loses 261,000 customers since start of year
(Adds CEO comments, updates share price)
By Karolin Schaps
LONDON, May 8 Britain's largest energy supplier,
Centrica, warned that warm weather and weaker commodity
prices in the first quarter had hurt its margins at its energy
supply business but it stopped short of revising any annual
The utility, which owns household energy supplier British
Gas, also used a first-quarter trading statement and annual
general meeting (AGM) on Monday to fire off another warning shot
against any government moves to cap energy tariffs.
Theresa May's ruling Conservative Party, which is widely
expected to be re-elected in a snap general election next month,
has pledged to introduce a cap on energy prices in a bid to ease
voter discontent about rising household bills.
"We fundamentally don't believe that price regulation is
good for consumers," Centrica Chief Executive Iain Conn said at
the company's AGM in London.
He said that any impact from a price cap was more likely to
be seen in 2018, but that little information was available to
assess its consequences.
"It's wrong to suggest supply companies have caused bills to
rise," he added, saying transmission and government policy costs
were to blame instead.
Analysts said these political risks continued to weigh on
Centrica's share price, which fell about 5 percent when the
Conservative Party announced its policy two weeks ago.
"Today's trading update reads as a small incremental
negative and ... we would continue to avoid the name until there
is better visibility on the competitive retail environment in
the UK," said analysts at RBC Capital Markets.
Centrica's shares initially fell after its trading statement
but were up 2.2 percent at 1511 GMT, helped by a wider rise in
Centrica said it had lost 261,000 customers since the start
of the year. Most of those losses were associated with a large
block of customers switching suppliers, a spokeswoman said.
Britain's biggest utilities have been facing severe pressure
from smaller suppliers entering the market and snapping up
customers by offering cheaper tariffs.
Centrica said warmer weather than usual in Britain and North
America had weighed on consumer energy demand in its two main
markets, mainly hurting gross profit margins at its UK business.
Lower prices for oil and British gas and power since its
last financial update in February also had a negative impact,
Centrica said, as they make its power plants less profitable and
reduce returns from the sale of its North Sea oil and gas.
Nevertheless, the company maintained its main financial
targets for the year, including reducing debt to 2.5 billion
pounds to 3 billion pounds ($3.2 bln-$3.9 bln), a level at which
its CEO said the company would consider raising its dividend.
Centrica cut its dividend two years ago and again last year
as earnings were hit hard by weak energy prices.
($1 = 0.7729 pounds)
(Editing by David Clarke and Susan Fenton)