The UK’s largest energy supplier, British Gas’s surge in profits has sparked a flurry of reactions, with industry experts and advocates sharing their views on the implications for consumers and the broader energy landscape.
Emi Murphy, Warm Homes Campaigner 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 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, pointed out the contradiction of government subsidies to oil and gas companies for North Sea drilling, which may not effectively lower energy bills due to global market forces.
Ms Ralston said: “Gas companies are still making huge profits at the expense of British billpayers and taxpayers. The OBR has warned the UK’s heavy gas dependency could see the national debt go up by 13% of GDP as similar gas price crises happen in future.”
Simon Francis, Co-ordinator of the End Fuel Poverty Coalition, said: “These profits are a further sign of Britain’s broken energy system.
“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.”
In response to the industry’s concerns, an Ofgem spokesperson defended the current profit levels, attributing the recent surge to suppliers recovering losses incurred during challenging times like the Covid-19 pandemic and geopolitical events.
An Ofgem spokesperson said: “After four years of loss-making, the energy retail sector is expected to return to profit this year. The profits we’ll see in the energy retail sector for the first half of this year are a one-off as suppliers recoup some of the significant costs and losses they incurred over recent years due to covid and the Russian invasion of Ukraine.
“We expect profit levels to fall back significantly moving forward to the reasonable and modest levels allowed for in the price cap. In future, this will help prevent supplier failures, such as the ones we saw at the start of the energy crisis, which cause disruption and additional costs for all households.
“Consumers, through their bills, and taxpayers, via unprecedented government subsidies for consumers, supported the sector and its customers as prices rose and costs spiralled. The sector must now learn the lessons of the energy crisis and look after their customers, especially the most vulnerable, and provide excellent customer service across the board.
“We have been clear they must not pay dividends until they are financially robust enough to weather future shocks. We’re closely monitoring levels of customer service, support and financial adequacy and can and will act where suppliers are found lacking.
“Part of this monitoring will include checking for undue benefits for suppliers as prices fall and profits return and, where we see this, Ofgem will recoup money from suppliers for consumers via the price cap. Longer-term we need to look at new ways to regulate prices while maintaining crucial protections and support for vulnerable customers.”
