British Gas results show energy supply still a ‘tough business’

British Gas’ financial results show energy supply is “a tough business to be in”, despite parent company Centrica posting an overall record profit, an industry expert has said.

Investec analyst Martin Young was speaking to Utility Week following the announcement of Centrica’s preliminary results in which it saw its adjusted operating profit increase by 250% to £3.3 billion in 2022.

Despite the strong overall performance from the group, retail arm British Gas saw its profits dip by £46 million to £72 million.

Referencing the company’s customer-facing businesses, Young said: “They were very small contributors to the overall mix and I think once again it reinforces the wider-held view in some quarters that supply, while things are improving as an industry, is a tough business to be in.

“People are not making huge amounts of money in the supply of electricity and gas to the British public.”

He added: “A level of the profitability is something that the media feel that they want to run with, even though that profitability is not coming from individuals in this country.

“It is in the upstream business, it’s in what effectively is a multi-jurisdictional, global energy market and trading business.”

“Obscene”

Despite the vast majority of Centrica’s profits coming from its upstream portfolio, there has been widespread criticism of the company making such a profit while consumer bills soar.

Greenpeace UK’s head of UK climate, Mel Evans, said: “As families up and down the country are plunged further into fuel poverty, record energy company profits line the pockets of wealthy shareholders.

“Much of Centrica’s obscene profits are coming from energy trading, but the windfall tax doesn’t cover this, nor the profits from gas-fired power stations.

“The government should expand the windfall tax immediately and use the money to fund home insulation, energy bill support and green heat. If they did, they could tackle the energy, climate and cost-of-living crises at the same time.”

Unite Union general secretary Sharon Graham said: “These energy companies are showing us everything that is wrong with the UK’s broken economy.

“Rishi Sunak should get a grip – pull the plug on rampaging energy profiteering, impose a meaningful, tough windfall tax and give the NHS a pay rise with the proceeds.”

Meanwhile Tom Marsland, policy manager at disability equality charity Scope, said: “It’s obscene that energy companies continue to make massive profits as disabled people face devastating situations because they can’t afford enough energy.

“Life costs a lot more when you’re disabled. We’re being inundated with heart-breaking calls from disabled people who haven’t eaten for days, who can’t afford energy to charge wheelchairs and stairlifts, but are still racking up huge energy debts.”