British Gas has reported its highest ever first-half profits, of almost £1bn, after the energy watchdog let it claw back more money from household bills.
The UK’s biggest energy supplier reported profits of £969m for the first six months of 2023, up almost 900% from £98m in the same period last year.
The profit boom was largely thanks to a tweak to the regulator Ofgem’s energy price cap that allowed the supplier to recoup some of the costs of supplying its 10 million customers during the energy crisis.
Ofgem’s controversial decision to allow energy suppliers to claim greater profits from hard-hit customers via the energy price cap also led to a windfall for EDF Energy and Scottish Power.
The French state-owned EDF reported that its UK business made profits of almost €2.3bn (£2bn) for the first half of the year – including the earnings from its nuclear power plants – up from €860m in the same months last year. It said this was driven mainly by the price cap. Scottish Power, which is owned by Spain’s Iberdrola, reported a profit of £576m for the first half of the year, from a loss of £86m last year.
Paul Nowak, the TUC general secretary, said: “While families across Britain have struggled to pay their bills, energy companies have been allowed to laugh all the way to the bank.”
A spokesperson for Ofgem described the profits as “a one-off” as suppliers recoup some of the significant costs and losses they incurred because of the Covid pandemic 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 spokesperson said.
The windfall earned by British Gas helped its FTSE 100-listed parent company, Centrica, to a profit of £6.5bn for the first half of this year, compared with a £1.1bn loss in the same months last year.
Chris O’Shea, Centrica’s chief executive, said the windfall profits would be used to increase the supplier’s customer support package to more than £100m and invest “several billion pounds” in the energy transition.
“I’m proud of the incredible work our colleagues do every day to help customers struggling with the cost of living crisis,” O’Shea said. “We are doing more than any other UK energy company and we will continue to be there when our customers need us.”
Earlier this year, he was told to “examine his conscience” for accepting a £4.5m pay packet, including bonus payouts totalling £3.7m, after it emerged that debt agents working for British Gas had broken into the homes of vulnerable customers to fit prepayment meters when they were unable to pay their bills.
The supplier’s record profits have angered consumer groups that have campaigned against its treatment of vulnerable energy customers as record energy market prices forced millions into fuel poverty.
Simon Francis, a coordinator of the End Fuel Poverty Coalition, called the profits “a further sign of Britain’s broken energy system”. He said: “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.”
Francis called on the government to do more to insulate homes and switch towards cheap renewable energy to lower energy bills permanently. He also called for more support for households this winter.
Centrica prompted outrage among campaigners after reporting a threefold profit rise last year to a record £3.3bn because of rising energy market prices that led to higher energy bills.
