The owner of British Gas has reported a big jump in profits – as its boss called for a “social tariff” that would help poorer Britons pay less for their gas and electricity.
The retail wing of parent company Centrica, which is mostly made up of British Gas, said profits soared to £799m in 2023, an increase from £94m a year earlier.
Profits were made in the first half of the year due to the energy-supplier firm’s ability to recover previous trading losses via the energy regulator Ofgem price cap, which limits how much users pay per unity of power.
Money latest: UK recession a ‘wake-up call’ for interest rate setters
Centrica said its bottom line was boosted to the tune of around £500m during the first six months of the year.
The sum is effectively a form of compensation for having to buy energy at a loss to the cap during the height of the energy crisis when gas prices reached record levels in 2022, it said.
It came as Centrica chief executive Chris O’Shea said customers struggling with energy bills would be best helped by the introduction of a social tariff, whereby vulnerable people are charged less via subsidised energy bills.
UK may not have enough gas to power the country in winter, Centrica’s Chris O’Shea says
British Gas profits to be ‘significantly higher’ in first half of year
British Gas owner Centrica faces pay revolt from top City firm
“The poorest in society are really struggling but it’s not just the energy. It’s energy, it’s rent, it’s mortgages, it’s food and all manner of costs,” Mr O’Shea said.
“What I’m focused on is how do we fix this in energy and that’s why we need a social tariff, that’s why we need the standing charge to disappear.
“I think that’s the best thing we can do for consumers. That will reduce the cost for the poorest in society, the people that are really, really struggling.”
Centrica’s annual results for 2023 said that while such high levels were a one-off, profits will continue. In 2024 profit is expected to come in between £150m and £250m.
At the same time customer debt has risen, the results said, as more consumers are unable to pay their bills due to the cost of living crisis.
Please use Chrome browser for a more accessible video player
The temporary pause in forced prepayment meter installation has worsened the situation, it said.
“The impact has been further exacerbated by the suspension of all field activity since January 2023, following the investigation into certain prepayment meter installation activity.”
The pause followed a Times undercover investigation showing the forced entry into indebted vulnerable customer homes to install prepayment meters by agents for the utility, for which Centrica apologised.
An extra £50m has been put aside for the company to deal with bad debt.
Fewer complaints were received, however, as 700 staff were hired for British Gas call centres, resulting in an 8% fall in complaints per customer, Centrica said.
Be the first to get Breaking News
Install the Sky News app for free
Centrica had extended its share buy back programme to own more of the company itself and on Tuesday reported £800m was returned to shareholders in 2023 through share repurchases and dividends.
