British Gas
British Gas owner Centrica shares plummeted on Thursday.

Shares in Centrica plunged 9.5% on Thursday after the group said it expects to take a £70 million hit from the government’s cap on standard tariffs. 

Centrica has said that the £70 million hit will affect results in the first quarter of 2019 and will be a one-off.

In the energy provider’s trading update, the group said: “As previously indicated, we expect the price cap to result in some negative near-term impact on earnings and cash flow, particularly in 2019 before we have fully realised planned cost efficiencies.”

Russ Mould, an investment director at AJ Bell, said: “Perhaps it would be better if British Gas owner Centrica just cut its dividend and got it over and done with.”

“A 9% dividend yield suggests the market is expecting such a move at some point anyway.”

The group’s chief executive Iain Conn said: “As we have done over the last four years, we are focused on driving significant underlying improvements in performance and delivering attractive returns while re-positioning the portfolio towards the customer.”

“Our efficiency delivery and new customer propositions are helping to offset the effects of strong competition and regulation in energy supply.”

The group expects to achieve 2018 targets.

“Our financial performance has remained resilient despite weaker than planned volumes from our E&P and Nuclear activities and cash generation remains strong,” said Conn.

“Maintaining a focus on performance delivery and financial discipline and demonstrating resilient cash flows remain our objectives for 2019 and beyond, as we deal with the impact of the UK energy supply default tariff cap.”

Centrica (LON: CNA) is the UK’s biggest energy supplier. Shares are currently trading -6.79% (1021GMT).