Gemma Hatvani has worked in the energy industry for 20 years but has never experienced anything like the past few months as struggling households engage with the Facebook-based service Energy Support and Advice UK.
“It’s terrible. . . requests from people who need food packages, top-up vouchers. . . I know we hear this word a lot but never before,” said Hatvani, a former business analyst for energy supplier Eon.
Public and political anger at UK electricity and gas retailers – whose consumer-facing businesses often bear the brunt of the wider energy industry’s anger – has grown following revelations this month about the forced installation of expensive pre-paid meters in vulnerable British homes. . Gas customers.
But executives worry that criticism will intensify as the parent company of some of the country’s biggest suppliers prepares to announce bumper results for 2022 in the coming weeks.
Centrica, the owner of British Gas, has said it expects an increase of almost eight times in adjusted earnings per share for 2022 when it reports. Analysts forecast net income of about £1.97bn, the best result in a decade, according to Bloomberg data. In November it launched a £250m share buyback, its first since 2014.
Others have posted similarly strong numbers in recent quarters. Revenue at ScottishPower, owned by Spain’s Iberdrola, rose 12 per cent to almost £1.3bn in the first nine months of last year.
Most of the profits of large providers do not come from selling electricity and gas to households, but from other divisions such as extracting gas from the bottom of the North Sea, generating electricity from nuclear power stations or wind farms and trading energy.
The retail energy market in Britain lost in aggregate. Even many of the larger energy companies are making losses selling electricity and gas to households.
But where companies make their profits is not a problem for hard-pressed households, fuel poverty campaigners say. Record results from oil major Shell, which has a supply arm in Britain, has triggered calls for an increase in windfall taxes on energy companies.
“At the end of the day, the reason the costs are high is because of the same energy companies,” said Simon Francis, coordinator of the End Fuel Poverty Coalition. “Maybe it’s a different division of that energy company, but . . . it’s still the same company.”
Analysts warn that the challenge for Centrica in particular will be acute, although it apologizes for “deeply disturbing” behavior unearthed by the Times investigation into the installation of forced prepayment meters.
“The PR course that Centrica has had to navigate has arguably been a difficult one,” said Martin Young, analyst at Investec.
Centrica, which declined to comment, is expected to write out there how much it will contribute to the exchequer in the tax windfall. The government has introduced a levy on fossil fuel producers and electricity generators to help reduce domestic energy bills.
Energy executives recognize that strong profits for some energy groups will be difficult to explain in the context of the cost of living crisis. But it said the results of some big companies masked deeper problems in the retail sector, which was downgraded after a rise in wholesale gas prices from 2021 led to the collapse of more than 30 loss-making suppliers.
Industry insiders warn the state of the retail market has become so bad that many companies want to quit. Shell has said it is considering withdrawing from energy supplies in the UK and elsewhere in Europe.
“A lot of companies regret moving to it [retail] or trying to get out of it,” said one senior industry executive.
Emma Pinchbeck, chief executive of trade body Energy UK, said the industry could not serve customers well and do other things like invest in new technology to help the UK meet its emissions targets unless it was “sustainable and viable”.
Energy UK is calling on the government to launch a promised “root and branch” review of energy retail to stop the industry spiraling from crisis to crisis.
“If they are [retailers] make money, they can invest in things like customer service. . . and all the things that have been done but now have to be done on a large scale because of the gas price crisis and many people are struggling with bills,” said Pinchbeck, although he added that there was no reason for unearthed behavior by contractors for British Gas.
Energy UK is also pushing the government for a “crisis plan” to help households through the rest of 2023 and 2024. If households continue to build up bad debt on a large scale, Pinchbeck warned, it could lead to more supplier failures.
This will include extending the government’s current energy price support so that the “typical bill” is capped at around £2,500 a year as it was in winter, instead of the government’s plan to increase it to £3,000 a year from April. seek to reduce subsidies.
Having worked for suppliers and on behalf of consumers, Hatvani has seen both sides of the industry.
“I spoke to the energy company and I started saying, ‘you can’t treat people like this’,” he said.
But he added: “For every customer that signs up, they’re losing money. Instead of being in the spotlight [being] in energy suppliers. . . the center of attention should be on the producer.”