Soaring gas prices have rewritten the rules on the energy market this year
(Picture: PA Wire)The owner of British Gas is facing a backlash after the company announced a five-fold increase in profits and plans to reinstate paying dividends to shareholders, despite millions of households facing a squeeze as energy bills soar.
Boosted by higher revenues from its oil and gas business, Centrica said its operating profits had increased to £1.3 billion in the first six months of the year from £262 million during the same period last year. At the same time, the firm said it would pay a dividend of 1p per share to shareholders for the first time in two years.
Centrica’s chief executive Chris O’Shea acknowledged the UK was facing a “difficult winter” but he defended the company, saying: “The source of our profits is not rising customer energy bills. I know it’s difficult to see the words ‘dividend’ or ‘profits’ when people are suffering... but we’re paying a windfall tax of well over £600 million pounds... so a lot of this is going back into society.”
The bumper profits came as new forecasts on Wednesday showed gas and electricity bills for the most vulnerable households in Britain could rise to an average of £500 a month in January, stoking the cost of living crisis and increasing the pressure on the Government to act to save millions of families from energy poverty.
The warning from consultancy BFY Group came as it forecast that the UK’s energy price cap could rise to an average of £3,840 in January following the latest surge in gas prices after Russia made further cuts in gas supplies to Europe.
Money Saving Expert’s Martin Lewis called on the Government not to wait until the outcome of the Tory leadership contest to decide on help for households who will face the energy price cap rising to £3,500 or more. “I’ve never seen anything like this,” he said. “It’s going to throw many households into a terribly difficult financial situation that will leave them making some awful choices.”
He told BBC Radio 4’s Today programme the data that informs the price cap suggests it will increase 77 per cent on top of the 52 per cent rise in April, taking the typical bill to £3,500 a year.
He said: “We are expecting it to rise again in January. People will be panicking, it will be desperate.”
Responding to the resumption of dividends to Centrica shareholders, Liberal Democrat leader and former energy secretary Sir Ed Davey said: “Millions of people and businesses are facing a financial catastrophe whilst oil and gas companies are feasting on a profits bonanza. We need a much tougher windfall tax to get the funds to help millions of people through what will be the toughest winter in generations.”
Meanwhile oil giant Shell announced today it had smashed its profit record for a second consecutive quarter, reporting adjusted earnings of $11.5 billion in the second three months of the year, breaking the record $9.1 billion posted in the first quarter.
