BRITISH Gas owner Centrica has seen a staggering rise of almost 900% in earnings in part of the business, the firm has revealed.
Underlying profits in the energy giant’s gas and electricity supply arm leaped 889% to £969 million in the six months to June 30 from £98m a year earlier as the firm was handed a price cap boost worth around £500m.
Centrica said the result was buoyed by Ofgem raising the price cap in the first part of the year, which allowed it to recoup losses seen a year earlier.
Overall, Centrica swung to a £6.5 billion operating profit in the first six months of the year against operating losses of £1.1bn a year earlier.
Energy firms saw their supplier profit margins hit last year, when wholesale prices were sent soaring by Russia’s invasion of Ukraine.
Wholesale prices have come down in 2023, while the price cap has been set at a level by Ofgem this year to allow firms such as British Gas parent Centrica to recover some of those earlier losses.
Meanwhile Shell said its profits fell to $5bn (£3.9bn) in the April-to-June period, blaming the fall in prices but the French national energy company EDF said its British operations including nuclear and wind power generation, saw earnings jump to £1.95bn from £740m in the same period last year, the BBC reported.
Centrica said it lost about £250m in the first six months of 2022 alone due to the price cap coming in lower than the cost it faced in wholesale markets, with the impact at its worst in the final quarter of 2022.
The firm’s update comes at a sensitive time – with households and businesses continuing to face high energy bills and soaring costs of food and other essentials.
Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: “These profits are a further sign of Britain’s broken energy system.
“At a time when household energy debt is spiralling to record levels and energy bills remain double what they were just a few years ago, the profits posted will be greeted with disbelief by those struggling through the crisis.
“There will of course be questions about how these profits were made, but the reality is that energy firms are operating on a playing field set by the Government.”
Alan Brown, the SNP’s energy spokesperson, said: “The UK Government is sitting on its hands and allowing energy companies to rake in record profits at the very same time that households are paying historically high prices on their energy bills.
"Wholesale energy prices have fallen significantly, but we know that the broken UK energy market means bills this winter will stay around 90% higher compared to 2021. Once again consumers are paying the price because of Westminster control."
Mark Ruskell, the Scottish Greens’ climate spokesperson, said: “For far too long these companies have been cheered on and supported by complicit and climate-wrecking governments like the one in Westminster, who want to give away even more of our seas to polluters.
"We don't have time to waste. We need an immediate end to new fossil fuel exploration, and a proper windfall tax to fund a fast and just transition to clean, green and renewable energy."
Liberal Democrat leader Ed Davey (above) said: “It beggars belief that after all these months this Conservative Government is still allowing energy firms to rake in extraordinary profits while millions of families struggle.”
Centrica said: “All suppliers had to purchase a portion of their electricity and gas at levels above the price cap.
“Allowances to recover this cost were introduced into the price cap from April 2022, with recovery continuing into the first half of 2023.”
Last year, Centrica more than tripled its adjusted operating profit, which reached £3.3 billion in 2022 amid turbulence in global energy markets.
Big swings in energy prices helped the company’s energy marketing and trading division, which made £1.4 billion in profit during the year, a 1,900% increase from the year before.
