British Gas record profits are ‘sign of a broken energy system’

Record profits of almost £1 billion posted by British Gas are a sign that Britain’s energy system is “broken”, a leading fuel poverty campaigner has suggested.

Simon Francis, coordinator of the End Fuel Poverty Coalition, was speaking following the news that the energy retailer had posted a record adjusted operating profit of £969 million for the first half of 2023, almost 900% higher than the same period in 2022.

British Gas parent company Centrica meanwhile reported its overall profits more than doubled from £1.3 billion to £2.1 billion.

Commenting on the news, Francis said: “These profits are a further sign of Britain’s broken energy system.

“At a time when household energy debt is spiralling to record levels and energy bills remain double what they were just a few years ago, the profits posted will be greeted with disbelief by those struggling through the crisis.

“There will of course be questions about how these profits were made, but the reality is that energy firms are operating on a playing field set by the government.

“People will rightly ask what this government is doing to curb these profits and fix our broken energy system.”

He further called for more support for households to stay warm this winter, a key pillar of Utility Week’s Action on Bills Campaign.

“The number one priority for energy firms and the government must be to support household and business customers who have become the victims of sky high energy prices – preferably as part of a wide scale ‘help to repay’ energy debt programme,” he added.

‘Laugh all the way to the bank’

More criticism of Centrica’s profits came from the TUC general secretary Paul Nowak who said: “While families across Britain have struggled to pay their bills, energy companies have been allowed to laugh all the way to the bank.

“The government could have imposed a proper windfall tax on excess profits. But instead it has chosen to leave billions on the table.

“This was a political choice that has benefited shareholders instead of hard-pressed households. Big oil and gas have gotten away with treating the public like a cash machine.

“Our failing energy retail companies should be brought into public ownership. That’s the way to bring down bills and invest in home improvements.”

Centrica is not the only energy company to have announced healthy H1 profits. Ofgem’s decision to allow suppliers to recover unexpected costs as a result of the energy crisis has seen Scottish Power record £576 million in earnings before interest and taxes (EBIT). EDF meanwhile made almost £1.9 billion from its UK business, compared to £736 million in H1 2022.

Commenting on the news, an Ofgem spokesperson said: “After four years of loss making, the energy retail sector is expected to return to profit this year. The profits we’ll see in the energy retail sector for the first half of this year are a one off as suppliers recoup some of the significant costs and losses they incurred over recent years due to covid and the Russian invasion of Ukraine.

“We expect profit levels to fall back significantly moving forward to the reasonable and modest levels allowed for in the price cap. In future this will help prevent supplier failures, such as the ones we saw at the start of the energy crisis, which cause disruption and additional costs for all households.”

They added that the sector must “learn the lessons of the energy crisis” and look after their customers, especially the most vulnerable.

“We have been clear they must not pay dividends until they are financially robust enough to weather future shocks. We’re closely monitoring levels of customer service, support and financial adequacy and can and will act where suppliers are found lacking.

“Part of this monitoring will include checking for undue benefits for suppliers as prices fall and profits return and, where we see this, Ofgem will recoup money from suppliers for consumers via the price cap. Longer-term we need to look at new ways to regulate prices while maintaining crucial protections and support for vulnerable customers.”