Shell and Centrica’s billions spur calls for more action on energy firm profits
British Gas made nearly £1 billion in underlying earnings in the first six months of the year.
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Your support makes all the difference.Opposition politicians and unions have demanded more action to rein in runaway profits as two of London’s biggest energy companies each said they had made billions of pounds in recent months.
British Gas made a record £1 billion in the first six months of the year, helping its parent company Centrica make £2.1 billion in adjusted operating profit, up 55% on the year before.
Meanwhile oil giant Shell said that it had made 5.1 billion dollars (£3.9 billion) in the three months to the end of June.
“These figures demonstrate the continuing scandal of the Tory failure to act on the windfalls of war being pocketed by oil and gas companies,” said Ed Miliband, Labour’s shadow climate and net zero secretary.
Labour, he said, would introduce a “proper windfall tax” on oil companies and promote cheap renewables to bring down bills for households.
The Liberal Democrat leader Sir Ed Davey called for a general election in his response to the companies’ profits.
“It beggars belief that after all these months this Conservative Government is still allowing energy firms to rake in extraordinary profits while millions of families struggle,” Sir Ed said.
He added: “It’s time for a general election and a proper windfall tax to fund the support families desperately need.”
While Shell’s profit shrunk during the quarter, down by 56% and fell short of expectations, British Gas’s £969 million profit was out of the ordinary.
In 2021 and 2022 what suppliers paid for energy rose enormously quickly while the price cap on energy bills only increased very slowly.
That left energy suppliers heavily out of pocket, leading dozens to go out of business.
Later, fearing more potential distress among companies if it did not, Ofgem said it would increase the price cap to allow suppliers to recoup these costs.
Both the Government and Labour need to decide whose side are they on
On Thursday British Gas revealed that it had recouped around £500 million, which became the lion’s share of its profit increase.
Centrica boss Chris O’Shea insisted this was not the new normal for British Gas.
In the future he expects British Gas Energy, Centrica’s energy supply division, to make a little under a quarter of a billion pounds a year in overall adjusted operating profit.
“We expect that going forward British Gas Energy will make on a normalised basis around £150 million to £250 million a year, a vast majority of that tends to be in the first half,” Mr O’Shea told reporters on a Thursday morning phone call.
“We would not expect to see profits anywhere near this level from British Gas Energy, it really is a one-off.”
He added: “I don’t see (£1 billion) as being reflective of the performance.
“You have to really strip it (the £500 million) out. It’s important that people understand that it’s simply a recovery of costs that we incurred in the past.”
While British Gas’s profits were ramping up due to the price cap allowance, Shell saw its profits decrease to much more normal levels.
Its 5.1 billion dollar adjusted earnings were lower than the 11.5 billion dollars it made in the same quarter last year.
But it is more in line with the company’s 2021 second quarter results, before the energy crisis, when it made 5.5 billion dollars.
Unite general secretary Sharon Graham said: “British Gas’ owner Centrica has just reported its highest ever first half year profits, raking in almost £1 billion.
“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.
“It is absolutely affordable. It would protect businesses and households. Put simply, it’s a no brainer.
“Both the Government and Labour need to decide whose side are they on.”