Millions are struggling to cope in the cost of living crisis, while energy companies rake in the profits. Image: Flickr/ Fuel Poverty Action
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British Gas’ profits have surged tenfold in just one year, its parent company Centrica has announced. It comes as damning new research has also revealed nearly half of people in Britain turn the heating off to save money even when it’s cold.
The energy giant reported profits of £799m in 2023 – up from £72m the year before. The eye-watering sum has been reported after industry regulator Ofgem allowed British Gas to recoup costs sustained during the energy crisis, recovering around £500m.
“In retail, we do not expect a repeat of the 2023 one-off benefits from cost recovery in British Gas Energy,” Centrica said, downplaying its vast profit margin. Nonetheless, the revenue has allowed the parent company to pay their shareholders a vast £144m dividend.
Meanwhile, damning new research has exposed the extent of the fuel crisis. Three in 10 of British adults have struggled to pay their energy bill in the last three months, National Energy Action (NEA) has warned, while half turned their heating off even though it was cold outside.
YouGov statistics released today (15 February) show that 3.17 million English households are officially in fuel poverty.
The End Fuel Poverty Coalition slammed Centrica’s “astronomical” profits as an affront to such families.
“At a time when household energy debt is spiralling to record levels and energy bills remain much higher than they were just a few years ago, the profits must be compared to the situation the firm’s customers are in – struggling through the energy bills crisis,” said Simon Francis EFP coordinator.
“These huge profits are one of the reasons households have had to cut back so much on their spending, sending Britain crashing into a recession.”
Fiona Waters, a spokesperson for Warm This Winter, echoed this criticism.
“British Gas’s obscene profits just epitomise rip-off Britain where bosses are paid millions each year at the expense of ordinary people, millions of whom are living in cold damp homes because they simply cannot afford to pay their huge energy bills,” she said.
“The cumulative effect of price increases is breaking household finances up and down the country. Meanwhile, politicians in their Westminster bubble persist in trading insults and throwing around numbers which are meaningless to most people.”
Both organisations called on the government to invest in cheaper renewable energy and home insulation to bring energy bills down permanently.
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How big are British Gas’ profits?
The huge profits are a “one off”, Ofgem said, “as suppliers recoup some of the genuine and 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,” the regulator added.
British Gas’s parent company Centrica echoed this.
“A large portion of British Gas Energy’s profit (c. £500m) is a direct result of the changes Ofgem introduced to allow the recovery of prior period costs through the default price cap.
“Without this, profit would have been less than half the reported number. British Gas Energy was loss making in the second half and profit is down from the £969m reported at interims.”
O’Shea said that lower commodity prices will lead to “naturally lower earnings” as the energy market returns to a more normal market.
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Bills will get cheaper later this year, while Ofgem’s price cap is forecast to decrease by nearly 14% by April, according to energy consultancy Cornwall Insight.
Nonetheless, the average annual bill will still be around £1,660 – much higher than £1,276 the average household paid in October 2021.
Amidst the ongoing cost of living crisis, Centrica and British Gas’ huge profits have elicited condemnation from trade unions.
Unite general secretary Sharon Graham called on the government to nationalise the energy companies.
“British Gas owner Centrica is still raking in astonishingly high profits off the back of exorbitant energy bills that are nearly double what they were three years ago,” she said.
“There is no point beating around the bush: The only way to stop households and businesses being ripped off by the profiteers in our energy supply chain is public ownership.”
