Centrica Shares Have Risen 44.8% Since October. What’s Next?

The Centrica PLC (LON: CNA) share price has rallied 44.8% to its current price after bottoming in October. The company’s share price has risen in tandem with rising gas prices, but the question on investors' minds is, will this rally extend into next year?

The short answer is we cannot foretell the future with a high degree of accuracy. Still, we can look at current events and plans to extrapolate what could happen if the situation plays out as expected.

For example, we know for sure that the government extended the period during which the current energy price cap of £2,500 per household is valid. The UK government will increase the Ofgem Energy Price Cap level to £4,279 from 1 January to 31 March 2023. 

After that, the Energy Price Guarantee programme will be extended from April 2023 to April 2024. During this period, a typical household energy bill in Great Britain will fall to around £3,000. 

So, how will the changes expected in the Energy Price Guarantee programme affect Centrica’s performance starting in January? The short answer is that consumers will be paying more for energy next year than they did this year, which could translate into more profits for the firm.

Centrica, which owns British Gas, is a powerful player in the UK energy sector and operates the Rough Storage Facility, which recently reopened, boosting the country’s gas storage capacity by up to 50%. 

The company’s profits have soared, boosted by the UK's record-high gas and electricity prices. Many have blamed energy companies for not doing enough to cushion consumers.

The  UK has instituted a windfall tax on energy producers for the additional profits generated from the high energy prices. However, Centrica was largely unaffected by the 40% windfall tax since its British Gas operations were affected by price caps and warm weather.

However, its electricity and gas generation businesses have been doing well, leading the firm to announce a £250 million share buyback programme. Still, the firm may be affected by the 45% temporary levy on electricity generators starting in January and an increase in the energy profits levy from 25% to 35%.  

*This is not investment advice. 

Centrica share price.

The Centrica share price has risen 44.84% from its October bottom of 65.85p to its current price of 95.38p.