Energy firm Centrica, which owns British Gas, has seen its profits more than treble in 2022 amid soaring energy prices following the Russian invasion of Ukraine.
The energy giant reported underlying operating profits of £3.3 billion ($4 billion), more than triple its £948 million profits for 2021.
Stripping out its Spirit Energy businesses that were sold, underlying earnings for the group jumped to £2.8 billion from £392 million the previous year.
Calls for More Windfall Tax
The main opposition Labour Party said the government should use the extra windfall tax to keep the energy price cap at its current level.Under the Conservative government’s Energy Price Guarantee, energy costs for average UK households are capped at £2,500. But Chancellor Jeremy Hunt said the cap will rise to £3,000 in April.
Labour’s shadow chancellor Rachel Reeves said: “Centrica’s full-year profits are more than triple the year before. In a matter of weeks, another spike in energy prices will hit families. The government must bring in a proper windfall tax on oil and gas giants to stop energy prices rising in April.”
Labour’s shadow climate secretary Ed Miliband promised that his party would introduce a “proper” windfall tax on energy companies.
“It cannot be right that, as oil and gas giants rake in the windfalls of war, Rishi Sunak’s Conservatives refuse to implement a proper windfall tax that would make them pay their fair share,” he wrote on Twitter.
Prepayment Meters
The new profit figures come just two weeks after The Times of London reported that debt collectors working for British Gas broke into homes of vulnerable customers to forcibly install pay-as-you-go metres.Commenting on Centrica’s soaring profits, Liberal Democrat leader Sir Ed Davey said: “This is a betrayal for British Gas customers across the country who are struggling to keep their heating on.
“Once again the government’s failure to implement a proper windfall tax is allowing oil and gas businesses to make billions off the back of hardworking families.
“What makes this worse is that thousands of British Gas families have had their homes broken into and prepayments forcibly installed because they could no longer afford to pay their sky high bills.
Profits ‘Have a Purpose’
Centrica chief executive Chris O’Shea has defended the massive spike in his company’s profits, saying that he would use the profits to help customers and the environment.“Profits at Centrica have a purpose, and that purpose is net zero, that purpose is helping customers having lower bills going forward,” he told reporters on a call.
O’Shea again apologised for the behaviour of subcontractors who had broken into people’s homes to force-fit energy meters and said it is vital to help people afford their bills following the revelations.
“I think what we need to do is to have a proper debate on what we want to do as a society to support those who can’t pay their bills,” he said.
“It goes beyond energy, it goes towards food, it goes towards rent, it goes towards mortgages, it goes towards council tax. There are clearly a bunch of people in the UK that are struggling to pay the bills.”
He said the exact way forward would be an issue for government, but added: “In the past, the old DSS (Department for Social Security) would make direct payments.
Energy Profits Levy
The idea of a windfall tax on energy companies was proposed by opposition parties after energy prices soared following the Russian invasion of Ukraine in February 2022.Rishi Sunak, then chancellor of the Exchequer, initially resisted the idea, warning about the impact it would have on future investment.
But in May 2022, he imposed a 25 percent profit levy on oil and gas giants to fund a £15 billion emergency support package to tackle the impact of energy inflation on British households.
After Sunak became prime minister, Chancellor Jeremy Hunt increased the windfall tax from 25 percent to 35 percent and imposed a 45 percent levy on electricity generators.
Hunt said that the Energy Profits Levy is expected to generate just over £40 billion between 2022 and 2028.
