Centrica maintains record profits of PS3.3bn

British Gas owner claims that one company cannot solve the UK’s living cost crisisCentrica insisted that Britain’s cost of living crisis could not be solved by one company alone as it sought to defend a more than threefold rise in operating profits to a record £3.3bn for 2022.

Centrica announced that it would increase the PS250mn share-buyback program, which was launched in November 2014 — its first since 2014 — to PS300mn.

Centrica profited from North Sea gas production, nuclear energy, and energy trading divisions. These were able to take advantage of the extreme volatility that was experienced in wholesale markets due to Russia’s invasion of Ukraine last year.

After releasing its results, British Gas’s owner came under fire from fuel poverty activists.

Simon Francis, the coordinator for the End Fuel Poverty Coalition (a group of charities and local authorities), said Centrica’s profits were built on the backs of older persons, young families, and those with disabilities who are living in cold, damp homes this winter.

George Dibb, the head of the Centre for Economic Justice, at think-tank IPPR said Centrica’s profits are “scandalous”. He called for a tax to be imposed on share buybacks.

This criticism was despite British Gas’s retail division operating profit falling 39% to PS72mn in 2022. The company also made voluntary donations to help customers who were struggling. British Gas supplies electricity, gas and other services to over 7.5 million British households.

Chris O’Shea is Centrica’s chief executive officer since 2020. He said that there should be a larger debate between the government and regulators about how to address the cost of living crisis. This was something he noted went beyond the ability of households to pay their energy bills.

Centrica is conducting an internal investigation that claimed that a British Gas contractor had entered vulnerable homes to install prepayment meters.

O’Shea stated that “where we have made it wrong, it will be fixed.” “It’s not something British Gas can solve, and it’s certainly not something Centrica can solve. It’s something that requires cooperation from industry, regulators, and the government. I hope it will extend beyond the energy industry.

Ofgem has ordered all energy suppliers to stop installing prepayment meters by using court warrants until the end of winter. O’Shea, when asked about the possibility of the practice ending permanently, described it as “tricky” but pointed out that it is illegal for companies to advance credit customers to those who know they can’t pay it back.

Centrica claimed it had spent more to help its customers with their rising energy bills than it did in the PS8 profit per client it made after tax in British Gas’ energy division.

It was also noted that the country paid approximately PS1bn in taxes for 2022, compared to PS433mn last year after the UK introduced a windfall tax of oil and gas producers. Similar levy was introduced on electricity generators at the beginning of this year. Centrica projects it will pay around PS2.5bn in UK windfall tax until 2028.

Mel Evans, Head of UK Climate at Greenpeace, stated that Centrica’s large windfall was largely due to its trading division which saw a 20-fold increase of operating profit to PS1.4bn.

Evans stated that neither the windfall tax nor the profits from gas-fired power stations will cover these costs. “The government should immediately increase the windfall tax and use the money for home insulation, energy bill support, and green heat.

O’Shea declined to comment on whether or not he would lose his annual bonus for 2022, as he did last.

Chris Hayes is a senior analyst at the Left-of-centre Common Wealth think tank. He said that a bonus for the chief executives “would not be justified at any time on moral, economic or economic grounds — especially because [Centrica’s profits] windfall is a result of circumstances beyond their control.”

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