As millions of homes struggle to pay their energy bills, there has been an outpouring of rage in response to British Gas reporting record half-year earnings.
British Gas’ profits increased to £969 million as price cap increases allowed it to earn more money from home bills.
The bumper results were a “one-off” owing to the adjustments, according to regulator Ofgem.
However, critics claimed the earnings were “yet another sign of Britain’s broken energy system.”
British gas owner Centrica said it was important to understand that the changes were “simply a recovery of costs that we incurred in the past”.
About half of British Gas’s profit – £500m – was due to changes to the price cap made by the energy regulator. By comparison, the business reported a profit of £98m in the same period last year.
Two other major energy suppliers also announced large increases in profits, helped by the changes to the price cap.
Scottish Power went from a large loss last year to profits of £576m in its retail division, while France’s EDF said its British operations – including nuclear and wind power generation – saw earnings jump to £1.95bn from £740m last year.
Profits have risen after the energy regulator raised how much suppliers can claim from household bills to make up for costs incurred during the pandemic.
But Ofgem said bumper profits in the first half of the year would be a “one-off” as energy firms recoup “significant costs” from the impact of the Covid pandemic and Russia’s invasion of Ukraine, and that profits would then “fall back significantly”.
On average, in 2022 suppliers made a shortfall for each dual-fuel customer due to the cap, but in the first half of 2023, the higher cap gave them a benefit of about £100 a customer.
Households were protected from the full rise in the cap by the government’s energy price guarantee, which ran from October to June and limited typical annual bills to £2,500.
Ofgem said that billpayers, and taxpayers via government subsidies, had “supported the sector and its customers as prices rose and costs spiralled”, adding that firms should not pay dividends to shareholders unless they are “financially robust”.
Centrica reported underlying operating profits of £2.1bn for the first six months of the year, up from £1.3bn a year earlier. It has proposed a 33% hike in dividends and a £450m extension of share buybacks.