Centrica has reported an almost 10-fold surge in first-half earnings at British Gas, the UK’s largest household energy supplier, threatening to reignite consumer anger at the sector’s profits at a time of high household bills.
Margins at British Gas, which has about 7.5mn customers, were boosted by higher gas and electricity prices, the company said on Thursday as it set out plans to increase its dividend and extend a share buyback plan.
Centrica’s earnings come as some companies in the broader energy sector are facing an end to a bumper run of profits triggered by Russia’s invasion of Ukraine. Shell on Thursday reported its lowest quarterly profit in almost two years after falls in oil and gas prices as well as refining margins.
Shares in Centrica, which are up 330 per cent since April 2020, climbed 5 per cent on Thursday morning to 130p as the London-listed company said it would pay an interim dividend of 1.33p a share, up 33 per cent from the same period last year. It will also extend its share buyback programme by a further £450mn.
Sharon Graham, general secretary of the union Unite, called for suppliers to be nationalised to “protect businesses and households”.
She added: “We need to stop dancing around our handbags and grasp the nettle. The only way to end the chaos in our energy supply is staring us in the face: public ownership.”
However, Centrica’s chief executive Chris O’Shea defended the high profits at British Gas, saying: “To be sustainable and to be stable, you’ve got to make a profit. This is really important.”
O’Shea said Centrica would spend an extra £50mn on helping vulnerable customers, taking its total on the programme to £100mn since the start of 2022.
Centrica said it planned to invest about £600mn-£800mn a year between now and 2028, including on gas-fired power plants, batteries and renewable electricity production such as solar plants.
Bills have fallen since the height of the energy crisis last year when wholesale prices surged but are still far higher than normal.
Under regulator Ofgem’s current price cap, which limits how much suppliers can charge for energy, typical households will pay £2,074 a year, well above the pre-crisis average of £1,150.
British Gas adjusted operating profits surged to £969mn in the first six months of this year, up from £98mn in the first half of 2022. Overall, Centrica reported an adjusted operating profit of £2.1bn in the half-year, up from £1.3bn in 2022.
British Gas profits were also buoyed by about £500mn after Ofgem allowed it to recover losses incurred when the price cap set by the energy regulator was too low to fully account for costs faced by suppliers.