British Gas has posted record profits, fuelled by Ofgem’s lucrative allowances in the energy price cap, with the household energy giant reporting a near ten-fold increase in its earnings.
The household retailer’s profits have climbed from £98m in the first six months of trading last year to a whopping £969m in the first half of 2023 – above analyst expectations.
It attributes at least £500m of this spike to Ofgem’s decision to allow the recovery of prior period costs for suppliers through raised allowances in the default price cap.
Without this, British Gas argues profits would have been less than half the reported number.
The group’s customer base has remained broadly flat, with 7.49m residential consumers on its books compared to 7.52m twelve months ago.
These hefty headline figures powered energy giant Centrica, which owns British Gas, to an upturn in profits.
In contrast to the declines expected across major fossil fuel producers, Centrica revealed that adjusted operating profits had climbed from £1.34bn to £2.08bn.
Infrastructure assets were also lucrative earners for Centrica, with its nuclear arm recording a year-on-year increase in profits from £286m to £295m, while its storage facilities more than treble in earnings over the same period from £76m to £251m.
This has contributed to a basic earnings per share of 25.8p, more than doubling the 11p per share total this time last year.
The group has also con firmed interim dividend of 1.33p – up from 1p flat last year.
The British Gas owner says it is home to roughly 500,000 small shareholders with the majority of its dividends to institutional investors paid directly or indirectly to UK pension funds.
It also revealed it has paid £650m of corporation tax and upstream levies this year.
The London-listed company has pledged to unveil fresh investment plans today, in line with £4bn commitments over the next five years in supplies, renewable generation, and customer support.
This could include expanding and converting Rough, the UK’s largest gas storage site owned by Centrica but operating at reduced capacity.