British Gas profits soar despite energy sector squeeze

British Gas’s retail unit has reported a big increase in profits despite a squeeze on the energy sector which has put many of its rivals out of business.

Parent company Centrica said British Gas Energy has seen a 44% jump in adjusted operating profit, which reached £118 million in 2021.

The business said it was helped by households using more gas in the first six months of the year due to unusually cold weather.

The unseasonably warm weather in the last three months of the year also allowed it to sell gas and electricity it had bought in advance, cashing in on high energy costs.

Centrica said it plans to pay back the £27 million that it claimed from the Government to furlough its staff.

Chief executive Chris O’Shea has also agreed to waive his £1.1 million bonus. His regular salary is £775,000.

His decision came as gas and electricity prices are set to increase by more than 50% for 22 million households across the UK.

“It just didn’t feel right, I didn’t feel like I could take the bonus,” he said on a call with reporters.

The chief executive also called for major changes to how the energy market is run in the UK.

“There is a desperate need for reform in regulation,” he said, calling for energy bosses to need to pass a “fit and proper person” test.

He also said that Ofgem and the industry must stop the practice of companies financing themselves with customer deposits.

He said that companies should be required to hold enough money to see them through the ups and downs.

Centrica chairman Scott Wheway said: “In 2021, I’m proud of the way Chris O’Shea has led Centrica to deliver significant benefits for our customers and wider stakeholders.

“We have rescued more than 700,000 customers from bankrupt suppliers, our engineers have bravely stayed out on the front line, despite the challenges of Covid, to fix the heating of millions of homes and we’ve done more than ever before to help support vulnerable customers to cope with the energy price crisis.”

He added: “Our financial progress and these achievements triggered an annual bonus entitlement for the CEO and it’s a mark of Chris’s exemplary leadership that, mindful of the difficulties many households face in light of the extreme rise in global energy costs, he has indicated to the board his intention to forfeit this entitlement.”

Across the whole group Centrica saw a 20% rise in revenue to £14.7 billion.

The group’s adjusted operating profit more than doubled to £948 million.

Andy Prendergast, national secretary of the GMB union, said: “It’s good to see Centrica back in profit.

“But GMB won’t forget this comes off the back of a demoralised workforce working longer and harder to deliver them.

“A good chunk of this cash must be reinvested in the employees, to help the company recruit the staff and engineers needed to service the millions of customers – not to mention the hydrogen technology necessary to cut heating costs in the future.

“The bottom line is, this Government’s broken energy policy allows soaring profits at the expense of basic need – while bills skyrocket.”