Energy supermajors Centrica and Shell pleased investors today but antagonised customers and politicians, reporting soaring profits. British Gas’s owner declared its first dividend for two years, on the back of profits rising five times on levels recorded in 2021’s first half.
Centrica’s group operating profit soared to £1.3 billion for the half to June. Chief executive Chris O’Shea, pictured, acknowledged that customers are “struggling”, and said the firm would “very much welcome more government intervention” to assist bill payers.
Job creation within Centrica’s British Gas division included 1,000 new customer service advisers, as well as 1,000 apprentices. The unit’s Energy Trust funds debt charities, and grants up to £750 to customers struggling to pay.
Across British Gas, profits actually fell 43% to £98 million, on the back of unhedged costs of gas bought at spot rates between eight and ten times the average rates of early 2021.
Centrica hopes to re-open the Rough offshore storage facility it closed in 2017, as a possible site for agreed purchases of Norwegian gas. The move requires government approval, and O’Shea could not guarantee Rough will be operating this winter. Had it been functioning seven months ago, it could have saved consumers around £100, the company calculates.
Absorbing 700,000 accounts over two years from failed rivals under Ofgem’s Supplier of Last Resort process increased BEG’s costs by £361 million last year. 2022’s bill is yet to be finalised.
The company echoed MPs’ demands this week for reform. “Consumers ultimately pay for supplier failures through future energy tariffs or taxation”, it commented.
“So we believe the energy retail market requires stronger prudential regulation to ensure those involved in the industry are fit and proper, and that companies have adequate capital and monitored risk management procedures”
Shell posted adjusted earnings of $11.5 billion in 2022’s second quarter, lifting the bar on the previous quarter’s record $9.1 billion, and doubling its $5.5 billion earnings a year ago.
Higher refining margins drove performance in Shell’s chemicals and products businesses. It also noted “exceptionally strong” earnings from gas and power trading.
Chief executive Ben van Beurden had resisted Rishi Sunak’s profits levy on oil and gas extraction.
He defended the supermajor’s unchanged budget – set at between $23 and $27 billion – to develop new fields. This week Shell signalled its intention to pump from its Jackdaw field in the North Sea.