Friday, February 16, 2024
More excessive profits
Today's news that annual profits at British Gas have soared more than tenfold after it tried to recoup costs from the energy crisis, while its parent company announced another £144m payout to shareholders, should come as no surprise to anybody. The big energy companies have been raking in the cash at the expense of poorer customers for a long time now.
The question though, is why are the government allowing them to get away with this behaviour when people are struggling to make ends meet and vulnerable pensioners and others are unable to adequately heat their own home?
The Guardian reports that Centrica released figures on Thursday showing that British Gas, which supplies energy to UK households and businesses, showed its profits jumped to £751m in 2023, up from £72m a year earlier:
The big increase in earnings came after the regulator, Ofgem, raised the energy price cap and allowed the company to recoup some of the costs of having to sell energy below wholesale price to its 10 million customers during the energy crisis.
Suppliers were forced to protect households from a spike in prices, which rose as a result of the Covid-19 lockdowns and Russia’s invasion of Ukraine, causing dozens of companies to fail.
The price cap rise, and subsequent increase in British Gas profits, pushed Centrica’s pre-tax profit to £6.5bn for 2023, compared with a loss of £240m a year earlier. The company’s preferred figure, which allows for bespoke adjustments, show profits fell 17% to £2.8bn for the year to December.
The chief executive, Chris O’Shea, said efforts to recoup costs supported British Gas profits only in the first half of the year, and the division took a £200m hit in the final six months of 2023.
He defended the remaining profits, which enabled Centrica to pay a final dividend worth £144m to its shareholders. “I said this before and I want to take this opportunity to say it again: to be sustainable you must make a profit. Which is super important because every consumer in the UK is paying £88 for the failure of other energy suppliers in the last few years. If more companies fail, these costs go on to customer bills.”
The final dividend brings Centrica’s one-off payouts to investors to £217m this year. Centrica said it was also voluntarily putting aside £40m to support customers, on top of the £100m spent in 2023.
The most astonishing part of this article however is where Centrica’s boss calls for a “social tariff” that would allow poorer Britons to pay less for gas and electricity compared with those who are better-off. I have also seen reports elsewhere that he wants to abolish the standing charge.
Well, why doesnt Centrica do both? They can afford it and there are no legal obstacles preventing them introducing a better social tariff and not imposing a standing charge. It's time the company put its money where its mouth is.
The question though, is why are the government allowing them to get away with this behaviour when people are struggling to make ends meet and vulnerable pensioners and others are unable to adequately heat their own home?
The Guardian reports that Centrica released figures on Thursday showing that British Gas, which supplies energy to UK households and businesses, showed its profits jumped to £751m in 2023, up from £72m a year earlier:
The big increase in earnings came after the regulator, Ofgem, raised the energy price cap and allowed the company to recoup some of the costs of having to sell energy below wholesale price to its 10 million customers during the energy crisis.
Suppliers were forced to protect households from a spike in prices, which rose as a result of the Covid-19 lockdowns and Russia’s invasion of Ukraine, causing dozens of companies to fail.
The price cap rise, and subsequent increase in British Gas profits, pushed Centrica’s pre-tax profit to £6.5bn for 2023, compared with a loss of £240m a year earlier. The company’s preferred figure, which allows for bespoke adjustments, show profits fell 17% to £2.8bn for the year to December.
The chief executive, Chris O’Shea, said efforts to recoup costs supported British Gas profits only in the first half of the year, and the division took a £200m hit in the final six months of 2023.
He defended the remaining profits, which enabled Centrica to pay a final dividend worth £144m to its shareholders. “I said this before and I want to take this opportunity to say it again: to be sustainable you must make a profit. Which is super important because every consumer in the UK is paying £88 for the failure of other energy suppliers in the last few years. If more companies fail, these costs go on to customer bills.”
The final dividend brings Centrica’s one-off payouts to investors to £217m this year. Centrica said it was also voluntarily putting aside £40m to support customers, on top of the £100m spent in 2023.
The most astonishing part of this article however is where Centrica’s boss calls for a “social tariff” that would allow poorer Britons to pay less for gas and electricity compared with those who are better-off. I have also seen reports elsewhere that he wants to abolish the standing charge.
Well, why doesnt Centrica do both? They can afford it and there are no legal obstacles preventing them introducing a better social tariff and not imposing a standing charge. It's time the company put its money where its mouth is.
