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The Guardian - UK
The Guardian - UK
Business
Alex Lawson Energy correspondent

British Gas owner expected to reveal record profits of £3bn

British Gas van stationed in Wimbledon, London
British Gas owner, Centrica, has profited from a surge in its North Sea oil and gas division. Photograph: Amer Ghazzal/Rex/Shutterstock

The owner of British Gas is poised to reveal record annual profits of more than £3bn, weeks after suspending the forced installation of prepayment meters due to concerns over its treatment of vulnerable customers.

Analysts expect Centrica, which owns Britain’s largest energy supplier, to post underlying profits of £3.3bn in 2022 on Thursday, up from £948m in 2021.

The earnings, aided by surging profits in its North Sea oil and gas division, are expected to surpass the company’s previous profit high of £2.7bn, recorded in 2012.

In the decade since, Centrica’s share price has tumbled as hundreds of thousands of British Gas customers have fled to rivals, including a string of new players that subsequently went bust during the energy crisis. British Gas has taken on some of those customers through the supplier of last resort process.

Centrica is likely to face criticism for reporting huge profits on the back of a surge in wholesale gas prices linked to the war in Ukraine, which has pushed up prices for consumers.

The company has also been in the spotlight over its treatment of vulnerable customers after it emerged that debt agents working for British Gas ignored vulnerabilities to break into customers’ homes to fit prepayment meters to recover debts.

The company suspended the use of court warrants to install prepayment meters, and the government and energy regulator Ofgem later ordered all energy suppliers to pause the tactic.

City analysts at Bernstein said the environment in the squeezed commodities market was “supportive” of higher profits at Centrica, “albeit tempered by the windfall taxes on nuclear as well as oil and gas”.

Centrica has a 20% stake in Britain’s nuclear power stations, which are run by EDF and are subject to the electricity generator levy implemented by the chancellor, Jeremy Hunt, to capture windfall gains.

Bernstein expects Centrica’s profits to reduce to about £2bn in 2023, still far above levels before the energy crisis.

Investors will be keen to learn Centrica’s forecasts for the price of wholesale gas, which has fallen sharply in recent weeks to below levels seen before the outbreak of war in Ukraine – although it is still above historic averages. It is hoped these falls will feed through into consumer bills over the coming months.

The energy consultancy Cornwall Insight said on Wednesday it had seen indications that suppliers may be “able to offer competitively priced tariffs within a matter of weeks”.

The government’s energy price guarantee policy has discouraged consumers from switching energy supplier during the winter as they receive about the same price regardless of supplier. But the consultancy predicts that millions of households could switch their energy supplier in second half of 2023, when bills are expected to ease.

Household switching rates dropped from an average of 496,000 electricity supply points moving each month in 2019 to 85,000 a month in 2022.

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