British Gas owner to post ‘significantly higher’ profits in household energy arm

The parent firm of British Gas has said profits will be “significantly higher” in its household energy business over the first half of 2023.

London-listed energy giant Centrica said the retail division, which includes British Gas, has been boosted by regulatory changes that allowed it to reclaim some losses from selling at capped prices.

The business also said that a small number of its shareholders, 6.8% of those who had voted before its annual general meeting on Tuesday, had voted against the pay packet for its chief executive.

Chris O’Shea – who forewent a bonus the year before – was paid a total of £4.5 million last year, including bonuses.

It came despite Centrica-owned British Gas being thrown into the middle of a public relations storm after it was revealed that a subcontractor was breaking into people’s homes to force-fit prepayment meters.

It was also a year which has seen British households swallow sharp increases in their energy bills after the Russian invasion of Ukraine sparked a surge in wholesale gas prices.

The Government’s current Energy Price Guarantee means annual energy costs have been limited to £2,500 for the average household, but prices are set to fall in July as the cap from energy regulator Ofgem is reduced.

In a trading update ahead of its annual general meeting, Centrica said the first five months of 2023 have been “strong overall” for the company, despite a reduction in wholesale energy prices.

It said group adjusted earnings per share are set to be at the “top end” of analyst expectations for the year.

The group, which is the UK’s biggest energy supplier, added that “adjusted operating profit in the first half of 2023 is expected to be significantly higher than in previous years” in its retail division.

Centrica said the main cause of this is a positive impact from changes to “allowances in the UK domestic default tariff cap”.

The group also told investors that its energy marketing and trading business has seen a “strong” performance to date as well, while volumes from its gas production, nuclear and gas storage divisions have been “good” and helped to offset the impact of falling commodity prices.

In a statement, the firm said: “As always, uncertainties remain over the balance of the year, including the impacts of weather, commodity prices, the economic environment, any changes to regulation or Government policy, asset performance and the competitive backdrop for our energy supply businesses.

“This results in a range of possible outcomes for the full year.”

The update comes ahead of the group’s AGM, where shareholders will vote on topics such as directors’ pay.

This includes a £4.5 million pay package for chief executive Chris O’Shea, representing a roughly five-fold increase.

British asset manager Abrdn has reportedly said it plans to vote against the group’s remuneration deal for bosses.