The chief executive of Centrica has refused to say whether he will waive a £1.6m bonus, as the British Gas owner’s annual profits tripled to a record £3.3bn after a price surge triggered by Russia’s halt on gas supplies to Europe.
The company’s “monster” profits angered campaigners who are calling for tougher windfall taxes, lower bills and better treatment of vulnerable customers, after British Gas and other energy suppliers were ordered by regulators to halt forced installations of prepayment meters.
O’Shea could land a pay package of more than £3m, including an annual bonus of as much as £1.6m. He waived a £1.1m bonus last year, saying he could not take it “given the hardships faced by our customers”. However, during a call on Thursday morning, O’Shea repeatedly refused to say whether he would do so again.
O’Shea said it was “too early to have a conversation” about his potential bonus payout despite pressure from campaigners to reject it. Details of his pay will be revealed in next month’s annual report.
Centrica announced it would hand £750m of its profits to shareholders. The dividend for the year will be worth more than £200m, while a further £300m will be spent boosting its share price by buying back its own stock. The sum is on top of an already announced £250m share buyback.
Simon Francis, of the End Fuel Poverty Coalition, has called on O’Shea to “look at his conscience”, citing the number of customers forced on to prepayment meters by British Gas, as many households struggle with a big jump in energy bills.
The general secretary of the Unite union, Sharon Graham, said the profits were obscene. “These energy companies are showing us everything that is wrong with the UK’s broken economy,” she said.
The company’s earnings for 2022 far outstrip the £948m made in 2021, aided by soaring profits in its North Sea oil and gas, and nuclear power divisions linked to the war in Ukraine. They also surpass Centrica’s previous record profit of £2.7bn, in 2012.
The Trades Union Congress general secretary, Paul Nowak, called for public ownership of energy companies and said: “While millions of families struggle to heat their homes, firms like Centrica are raking in monster profits.”
Centrica cut its dividend to shareholders during the Covid pandemic but reinstated it last year, when it made an interim £59m payout.
Traders cheered Centrica’s performance, sending shares 5% higher in morning trading, making it the top riser on the FTSE 100 and helping to push the UK’s blue-chip share index to a new record high of 8,047.
British Gas faced widespread criticism earlier this month when it emerged that debt agents working for Britain’s largest energy supplier had ignored customers’ vulnerabilities and forced them on to prepayment meters to recover debts.
The revelations caused the company to suspend the use of court warrants to install prepayment meters, and all suppliers have been temporarily banned from the practice.
On Thursday, Centrica said it was “extremely disappointed by the allegations surrounding one of our third-party contractors”.
Centrica’s North Sea profits are subject to a windfall tax on North Sea oil and gas operators. It also has a 20% stake in Britain’s nuclear power stations, which are subject to the electricity generator levy implemented by the chancellor, Jeremy Hunt, to capture windfall gains.
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O’Shea said it would pay £1bn of tax for 2022 and he expects the group to pay £2.5bn in windfall taxes over their lifetime.
Labour has called for the oil and gas windfall tax to be expanded to capture a greater proportion of profits.
Calls for a larger windfall tax on oil and gas companies have increased in recent weeks after big firms including Britain’s BP and Shell posted record profits.
Profits at British Gas’s energy supply arm fell 39% to £72m. In August the company announced it would donate 10% of profits from that division to help its poorer customers manage rising gas and electricity bills for the “duration of the energy crisis”.
O’Shea said the £75m Centrica had spent supporting British Gas household customers had surpassed the £72m profit made. Asked whether more of Centrica’s group profits should have been invested in helping households, O’Shea said: “If we were to invest profits from one part of our business that others couldn’t invest, I’m pretty sure that [rivals] would label this anti-competitive.”
O’Shea said “the solution to the affordability crisis” needed to be discussed with government and encompass concerns over the cost of food, rent and council tax too. “It has to start with society: what do we want to do, and obviously that has to come through the government,” he said. Energy bills are expected to rise by 40% from April.
Centrica said it had invested £200m in customer service, support and pricing as energy bills soared.
