Anti-poverty campaigners rage as energy giants rake in cash
Feb 16, 2023, 7:42 AM | Updated: 7:46 am
LONDON (AP) — Anti-poverty campaigners fumed Thursday after the parent of Britain’s biggest home energy supplier said earnings more than tripled last year as consumers struggled to pay soaring utility bills.
British Gas owner Centrica followed Shell and BP as the latest U.K.-based energy company to rake in massive profits after oil and natural gas prices surged as the result of Russia’s invasion of Ukraine. That sparked renewed calls from the opposition Labour Party for an expanded tax on those companies’ windfall profits.
Centrica said adjusted operating profit jumped to 3.3 billion pounds ($4 billion) in 2022 from 948 million pounds the previous year. That was good news for shareholders, with the company announcing plans to boost an existing share buyback program by 300 million pounds and pay dividends totaling 59 million pounds, compared with nothing in 2021.
The earnings came just two weeks after an investigation by the Times of London found that a debt collection company working for British Gas had broken into the homes of some people who were unable to pay their bills this winter and installed meters that require customers to pay for energy in advance.
Centrica officials apologized, said they were unaware of the contractor’s behavior and suspended the practice.
“The profits of this firm are built on the backs of older people, young families and the disabled suffering in cold, damp homes this winter,” said Simon Francis, coordinator of the End Fuel Poverty Coalition.
Centrica is both a wholesale energy producer and a retail supplier.
The company said most of its earnings came from energy trading and marketing, as well as its nuclear power operations. By contrast, operating profit at the retail British Gas Energy unit fell 39%, to 72 million pounds.
British Gas is the U.K.’s biggest residential energy supplier, with more than 7.5 million customers across the country.
Centrica said it was “acting responsibly through the energy crisis,” providing 50 million pounds of support for customers and pledging to donate 10% of British Gas profits to help protect vulnerable customers.
“Therefore, we were extremely disappointed by the allegations surrounding one of our third-party contractors and their approach to pre-payment customers,” Centrica said. “We immediately took action to address this and are completing a thorough independent investigation.”
Britain has been hard hit by the high cost of natural gas because limited storage capacity left energy suppliers at the mercy of international markets as prices soared.
That contributed to double-digit inflation that has fueled a wave of public-sector strikes, soaring food bank use and the biggest drop in living standards since records began in the 1950s.
The government tried to ease the pain with subsidies designed to limit average household energy costs to no more than 2,500 pounds a year, a figure that will rise to 3,000 pounds on April 1. Even with that protection, the average household bill has almost doubled in the past year.
Centrica acknowledged that more needs to be done to protect customers.
“We believe a fundamental review of energy regulation is required to ensure the system is ready for the energy transition, works for consumers and allows well-run suppliers to make an appropriate return to compensate for the risks taken,” the company said.
Britain’s Conservative-led government last year imposed an additional 25% tax on the profits that oil and gas producers make from their U.K. operations. The tax increased to 35% on Jan. 1.
On top of that, the government approved a 45% tax on the “exceptional” profits of wholesale electricity producers that took effect this year.
The Labour Party called on the government to immediately expand the windfall tax on oil and gas producers to provide more help for consumers. The party has criticized the government for allowing energy companies to reduce their tax payments with investments in the U.K.
“In a matter of weeks, another spike in energy prices will hit families,” Rachel Reeves, Labour’s spokesperson on Treasury issues, tweeted after Centrica’s earnings. “The government must bring in a proper windfall tax on oil & gas giants to stop energy prices rising in April.”
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