Gemma Hatvani has been in the energy industry for 20 years but has never experienced anything like the past few months as struggling households flock to her Facebook-based service, Energy Support and Advice UK.
“It was terrible. . . demand from people who need food parcels, top-up coupons. . . I know we hear this word a lot but it never happened,” said Hatvani, a former business analyst at energy supplier Eon.
Public and political anger at electricity and gas retailers in the UK – where consumer-oriented businesses often incur the wrath of the broader energy industry – has increased. high following revelations this month of the forced installation of expensive prepaid meters in the homes of vulnerable Britons. benevolent.
But executives are braced for criticism that will mount even further as the parent companies of some of the country’s biggest suppliers prepare to post bumper results for 2022 in the coming weeks. next week.
Centrica, owner of British Gas, has said it expects adjusted earnings per share to grow nearly eightfold by 2022 when it reports on Thursday. Analysts are forecasting net income of around £1.97 billion, the best result in a decade, according to Bloomberg data. In November, it launched a share buyback worth £250mfor the first time since 2014.
Others have published similarly strong numbers in recent quarters. Earnings at ScottishPower, owned by Spain’s Iberdrola, rose 12% to nearly £1.3 billion in the first nine months of last year.
Most of the profits of the major suppliers do not come from selling electricity and gas to households but from other divisions such as extracting gas from beneath the North Sea, generating electricity from nuclear power plants, etc. business or wind farm and energy business.
The UK retail energy market is losing money overall Even many big energy companies are losing money selling electricity and gas to households.
But where companies make a profit doesn’t matter to disadvantaged households, poverty campaigners say. Record results from major oil company Shell, which has a supply arm in the UK, triggered calls for a surprise tax hike on energy companies.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “Ultimately, the reason for the high costs is the energy companies themselves. “It could be another division of that energy company but . . . they are still owned by the same company.”
Analysts warn that the challenge to Centrica in particular will be severe, although the company has apologized for “deeply disturbing” behavior uncovered by a Times investigation into the installation. required prepaid metering.
“The PR path that Centrica has to navigate has become more difficult,” said Martin Young, analyst at Investec.
Centrica, which declined to comment, is expected to announce on Thursday how much it will contribute to the budget in surprise taxes. The government has imposed taxes on both fossil fuel producers and electricity producers to help finance cuts in domestic energy bills.
Energy executives recognize that high returns for some energy groups will be difficult to explain amid the cost of living crisis. But they say the results of a handful of major players masking deeper problems in the retail sector, whose rankings halved after a spike in wholesale gas prices from 2021 led to a sharp fall in prices. collapse of more than 30 loss-making suppliers.
Industry insiders warn the state of the retail market has gotten so bad that many companies want to quit. Shell said it was consider withdrawing from the energy supply in the UK and elsewhere in Europe.
“Many companies are either regretting switching to [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 as a whole could not serve customers well and do other things like invest in new technology to help the UK achieve its goals. emissions unless it is “sustainable and feasible”.
Energy UK is calling on the government to launch a promised get a “root” look at the energy retail industry to prevent it from plunging from one crisis to another.
“If they [retailers] make money, they can invest in things like customer service. . . and all the things they’ve done but now need to do on a massive scale because of the gas price crisis and the sheer number of people struggling with bills,” Pinchbeck said, though she added that there is no excuse for this. acts unearthed by contractors for British Gas.
Energy UK is also pushing the government to develop a “crisis plan” to support households for the remainder of 2023 and 2024. Should households continue to have large-scale bad debt, Pinchbeck warning, that can lead to more failed providers.
This would involve extending the government’s current energy price support so that the “typical bill” is capped at around £2,500 a year as has happened during the winter, rather than the EU’s plan. government is increasing it to £3,000 a year from April as it is now. seek to cut subsidies.
Having worked for both suppliers and representing consumers, Hatvani has seen both sides of the industry.
“I’ve talked to energy companies and I’ve pretty much started off with, ‘you can’t treat people like this,'” she said.
But she added: “For every customer they sign up for, they are losing money. Instead of the spotlight [being] about energy suppliers. . . The spotlight should be on the producers.