Profits triple to £3.3bn at British Gas owner after energy prices soaron February 16, 2023 at 11:09 am

British Gas owner Centrica has posted huge profits after oil and gas prices soared last year, sparking renewed calls for energy firms to pay more tax.

Its profits hit £3.3bn for 2022, more than triple the £948m it made in 2021.

Energy firms have seen record profits since oil and gas prices jumped after Russia invaded Ukraine.

The figures come after British Gas was criticised over its use of debt agents to force-fit prepayment meters in the homes of vulnerable customers.

Energy firms have faced huge pressure to pay more tax in the UK on their profits, as many households struggle with higher gas and electricity bills.

Paul Polman, former boss of consumer goods giant Unilever, told the BBC’s Today programme that recent profits at energy firms were “definitely hard to ignore”.

“We have to think about the balance between short term greed and long term need,” he said.

The majority of Centrica’s bumper profits came from its nuclear and oil and gas business, rather than from the British Gas energy supply business, which contributed £72m out of the £3.3bn profit. The overall profit figure also included the impact of selling its Spirit Energy oil and gas business in May.

Centrica said British Gas’s profits had actually decreased by 39% compared to 2021’s levels, largely because of “voluntary donations made to support customers” and the repayment of furlough funds it received at the height of the pandemic.

The company said it paid about £1bn in tax relating to its 2022 profits.

Of that, it confirmed about £54m was paid as result of the windfall tax – called the Energy Profits Levy – which was introduced by the government last year to recoup some of the “extraordinary” earnings made by firms and help fund lower gas and electricity bills for households.

But Centrica also said it would increase the money it returned to its shareholders, as it launched a £300m share buyback programme and a full-year dividend of 3p a share.

The release of Centrica’s profits sparked criticism from trade unions, campaigners and opposition politicians.

Unite general secretary Sharon Graham said Centrica had been “coining it in from our massive energy bills while sending bailiffs to prey on vulnerable consumers the length and breadth of the country”.

Simon Francis, coordinator of the End Fuel Poverty Coalition campaign group, added the energy market was “failing consumers and is in desperate need of reform”.

Shadow climate secretary Ed Miliband hit out at the government and promised that Labour would introduce a “proper” windfall tax on energy companies to “pay their fair share”.

Centrica chief executive Chris O’Shea said the energy crisis and cost of living pressures had “created a challenging environment for customers and communities”.

But he said the company had “been able to provide much needed stability and support” and had “invested £75m in supporting our energy customers in 2022”.

Centrica is really two separate businesses, one of which is making record breaking profits and one which is not.

Its retail arm, British Gas, contributed about 2% or one fiftieth of its £3.3bn in profit – the rest came from its gas extraction and electricity generation business.

But taken as a whole people will see a company swimming in cash while hiring debt collection agencies to break into struggling households to fit prepayment gas meters which many will be unable to afford to top up – prompting understandable anger.

Competition rules prevent Centrica from selling the energy it produces more cheaply to its own retail customers than others, so what does it do with its embarrassment of riches?

It has already suspended the agency involved in the forced prepayment meter fitting and both the courts and the regulator have ordered all such activity to be paused. Windfall taxes saw Centrica pay about £54m last year and the company estimates it will pay £2.5bn by 2028, but many will still see that as insufficient.

The problem of how to fix that is a matter for government rather than the likes of Centrica, Shell and BP

The company has been heavily criticised in recent weeks after it was revealed debt agents working for British Gas, the UK’s largest electricity and gas supplier, had broken into the homes of vulnerable people behind on bills to force-fit prepayment meters.

The revelations resulted in Ofgem, the energy watchdog, asking all suppliers to suspend forced prepayment meter installations, telling firms to get their “house in order”.

Centrica said in its results update that it was “extremely disappointed by the allegations” surrounding one of its contractors, Avarto Financial Solutions, and “their approach to prepayment customers”.

“We immediately took action to address this and are completing a thorough independent investigation,” it added.

There are more than four million UK households on prepayment meters

These require customers to pay for their energy use in advance, either through accounts or by adding credit to a card. It is a more expensive method of paying than by direct debit, but is sometimes the only option for people in debt to suppliers or who struggled to pay bills.

However, strict rules are meant to stop energy suppliers moving at-risk customers onto prepayment meters, amid concerns people may “self disconnect” when they cannot afford to top up.

An undercover investigation by the Times newspaper revealed how agents working for Arvato Financial Solutions on behalf of British Gas forced their way into the home of a single father-of-three to install one. It resulted in many more similar incidents being brought to light.

Another British Gas customer Ricky, who lives in Kingston upon Thames, had a prepayment meter force-fitted at his home in November last year.

The 46-year-old suffers from long Covid and is unable to work regularly. He told the BBC he was placed on British Gas’s vulnerable customers register after they sent him an £800 bill upon taking over his account from a previous supplier that went bust.

But one morning he was woken up by people banging on his front door and shouting. He got to the front door and saw a locksmith kneeling down about to break in.

“I was just completely bewildered,” the 46-year-old said. Ricky said a woman from Arvato Financial Solutions handed him a letter and said he had “no choice” but to have a smart prepayment meter fitted.

Ricky said the whole experience was “distressing and degrading” and added he “felt ashamed”.

“I thought this is what I deserve for not being able to pay,” he said. “All my neighbours must have thought I was being arrested or something.”

British Gas said it was “really sorry” to hear about Ricky’s experience and would contact him to “look at how we resolve things”.

“We’ve made it clear we feel extremely let down by Arvato carrying out warrants on our behalf,” a spokesman added.

Arvarto Financial Solutions has remained silent over the allegations so far.