Anger as British Gas owner’s profits triple to ‘monster’ £3.3bn | Centrica

The scandal-hit owner of British Gas has seen its profits more than triple to a record £3.3bn boosted by soaring wholesale gas prices after Russia’s invasion of Ukraine and as many households in Britain struggle with the cost of living.

Centrica’s “monster” profits immediately angered campaigners calling for tougher windfall taxes, lower bills and better treatment of vulnerable customers against the backdrop of the prepayment meter scandal.

The company’s profits for 2022 far outstrip the £948m made in 2021, aided by soaring profits in its North Sea oil and gas and nuclear power divisions. They also surpass the company’s previous profit high of £2.7bn, in 2012.

Unite general secretary, Sharon Graham, said the profits were “obscene”. “These energy companies are showing us everything that is wrong with the UK’s broken economy,” she said.

The TUC general secretary, Paul Nowak, called for public ownership of energy companies and said: “While millions of families struggle to heat their homes, firms like Centrica are raking in monster profits.”

Centrica’s dividend was cut during the pandemic but reinstated last year, when it made an interim £59m payout. On Thursday, it said shareholders would receive a dividend worth more than £200m in total this year.

The company will spend a further £300m on buying back its own shares, on top of a previously announced £250m share buyback.

Centrica shares rose 5% on Thursday morning, making it the top riser on the FTSE 100.

British Gas faced widespread criticism earlier this month when it emerged that debt agents working for Britain’s largest energy supplier had ignored customers’ vulnerabilities and forced them on to prepayment meters to recover debts.

The company suspended the use of court warrants to install prepayment meters and all suppliers have been temporarily banned from the practice.

On Thursday, Centrica said it was “extremely disappointed by the allegations surrounding one of our third-party contractors.”

The chief executive, Chris O’Shea, is in line to land more than £3m in salary and bonuses through a pay package linked to Centrica’s financial performance, including an annual bonus of as much as £1.6m.

He waived a £1.1million annual bonus in 2021 and has been urged by campaigners to do the same again.

Centrica’s North Sea profits are subject to a windfall tax on North Sea oil and gas operators while it also has a 20% stake in Britain’s nuclear power stations, which are subject to the electricity generator levy implemented by the chancellor, Jeremy Hunt, to capture windfall gains.

However, Labour has called for the oil and gas windfall tax to be expanded to capture a greater proportion of profits.

Calls for the windfall tax on oil and gas companies have increased in recent weeks after oil majors including Britain’s BP and Shell posted record profits.

Labour has called for the scrapping of an investment allowance which cuts tax for oil and gas operators’ spending on increasing production.

Sana Yusuf, climate campaigner at Friends of the Earth, said the government “needs to step up and back growing calls for a tougher windfall tax on the excessive profits of fossil fuel companies like Centrica to help fund the investment in insulation and homegrown renewables needed to bring down bills and cut emissions”.

Centrica said its turnaround under O’Shea was “well advanced” and that it had £1.2bn of cash on its balance sheet, compared with debts of £4bn three years ago. However, the company did take a £2.4bn hit from the sudden fall in wholesale gas and power prices at the end of 2022.

Profits at British Gas’ energy supply arm fell 39% to £72m. In August the company announced it will donate 10% of profits from that division to help its poorer customers manage rising gas and electricity bills for the “duration of the energy crisis”.

The company said it had invested £200m in customer service, support and pricing as energy bills soared. “We are very aware of the difficult environment many customers are facing due to the high level of energy bills and wider inflationary impacts and we will continue to do what we can to support them,” Centrica said.

Customers have complained that too much of their money is being hoarded by energy suppliers. On Thursday Centrica, which has argued customer funds should be ringfenced, said it held £643m in customer deposits in a separate account.