British Gas: Anger as energy bill change leads to record profitson July 27, 2023 at 8:23 am

There has been an angry reaction to British Gas reporting record half-year profits as millions of households continue to struggle to pay for energy costs.

British Gas reported profits of £969m after price cap rises allowed it to make more money from household bills.

Regulator Ofgem said the bumper profits were a “one-off” due to the changes.

But poverty campaigners said the profits “are a further sign of Britain’s broken energy system”.

About half of the profit was due to the changes to the price cap made by the energy regulator.

Ofgem had raised the allowance suppliers can claim from household bills to make up for costs incurred during the pandemic.

Simon Francis, coordinator of the End Fuel Poverty Coalition, 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.

“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.”

Price comparison site Uswitch said the “strong” profits were linked to a “failing price cap”, adding that it was stifling competition.

It means suppliers have less reason “to innovate and offer cheaper, competitive deals that could bring prices down,” said Richard Neudegg, Uswitch director of regulation.

Price cap rises were brought in to let energy firms make up for losses when wholesale oil and gas prices spiked during the Ukraine invasion but bills were limited by the price cap, British Gas owner Centrica said.

Centrica itself reported underlying operating profits of £2.1bn for the first six months of the year, up from £1.3bn a year earlier.

Energy firms have continued to make big profits from oil and gas, even though energy prices are not as high as they were last year.

Russia’s invasion of Ukraine in 2022 pushed up oil and gas prices and led to energy firms making record profits.

Oil and gas giant Shell said profits fell to $5bn (£3.9bn) in the April-to-June period, partly due to the fall in prices.

Shell said it had also been selling less oil and gas and making lower profits on refining.