Profits at British Gas owner Centrica have increased to almost £1 billion in the first half of 2023 as a result of changes to the price cap.
The company recorded adjusted operating profits of £969 million in the first half of the year, including £500 million in extra profits as a result of changes to the price cap, up from £98 million in the same period a year earlier. The effective tax rate on adjusted operating profit decreased to 28% from 46% in 2022.
Shareholder dividends were up 33% from the previous first half at 1.33p per share. The company also announced that its share buyback programme was being extended by £450 million.
The company said it was also increasing its customer support package to £100 million to help British Gas customers dealing with the cost of living crisis, and would invest “several billion pounds in the energy transition”.
The Guardian reported that the surge in profits was a result of energy regulator Ofgem’s tweaks to he price cap which allowed Centrica to recoup some of the cost of supplying its customers during the energy crisis.
The change in rules has also allowed other companies to increase their profit margins, with EDF reporting its UK business made profits of almost £2 billion in the first half of the year, while Scottish Power’s profits grew to £576 million.
Ofgem described the situation as “a one-off”, with Centrica also saying the profit “includes significant one-off recovery of past costs through the UK price cap mechanism.”
The announcement was criticised by a number of groups, with Simon Francis from the End Fuel Poverty Coalition saying “these profits are a further sign of Britain’s broken energy system”.
Emi Murphy, campaign lead at Friends of the Earth, said “There’s no acceptable reality where an energy company should see profits rise by nearly 900% over the same period while millions struggle to afford to power and heat their homes. It’s indefensible that firms behind both our soaring bills and the deteriorating state of the planet are still raking in billions in excess profits.”
Jess Ralston, head of energy at the Energy and Climate Intelligence Unit (ECIU) said: “Government is currently subsidising oil and gas companies to drill more in the North Sea. And despite having committed to lift the ban on onshore wind last year, the government is yet to act.”
“Prioritising oil and gas over cheaper renewables and pushing back regulations on insulation in rental homes, both of which would bring down bills, is against advice from the International Energy Agency, United Nations and Climate Change Committee. Gas companies are still making huge profits at the expense of British bill and tax payers. The OBR has warned the UK’s heavy gas dependency could see the national debt go up by 13% of GDP should similar gas price crises happen in future.”
Earlier this year, Current± reported that Centrica’s profits for 2022 more than tripled to hit £3.308 billion.