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Ofgem says energy suppliers’ profits are “fair”… but are they really?

British gas boss continues to make astronomical profits

Written By Ceri Jones

May 15, 2024

We recently wrote about the  scandal with British Gas boss, Chris O’Shea, who said in a recent BBC interview that his huge paycheck was “impossible to justify”. As the saga continues, this week it seems that Ofgem has backed the energy baron, as the head of Ofgem, Jonathon Brearley, has argued that energy company profits are reasonable.

It is reported that in 2023, O’Shea was paid £8.2 million, an 80% increase from the previous year. Whilst he claims there is “no point” trying to justify this apparently reasonable pay, many businesses continue to face closure due to skyrocketing energy bills.

In part two of our reporting on the energy villains robbing UK businesses, we’ll look into their profits and whether they really are “fair”.

Energy Company Profits

A concerning 2.2 million people across the UK reported that energy bills were their biggest concern throughout  winter 2023. Meanwhile,  energy companies are continuing to make bigger and bigger profits year-on-year. In 2023, British Gas (owned by Centrica) made £751 million in profits, a huge increase from the £72 million in profit made in 2022.

“Centrica is still raking in astonishingly high profits off the back of exorbitant energy bills that are nearly double what they were three years ago” – Unite’s general secretary, Sharon Graham.

She further described the company as one of the “profiteers in our energy supply chain”, which are the root cause of “businesses being ripped off”. 

And she’s not wrong. Whilst British Gas makes its £751 million, a multitude of sectors continue to struggle with their rising bills:

Manufacturing: six in ten say that increased energy costs are now business threatening.

Hospitality: just 29% of hospitality businesses feel optimistic about the next 12 months, with energy their biggest concern.

Care Homes: one third of homes in England have considered closing due to rising energy bills.

These fears aren’t unfounded. Family butcher William Jones and Sons shut up shop in Newtown, Powys, after trading for nearly 150 years. That stopped when they discovered their energy bill was set to rise from £1,000-a-month to £1,000-a-week. 

Cost of Living Crisis Continues

Whilst energy bosses can’t even justify their own pay packets, millions across the UK have been hit by higher energy bills. Energy is also the biggest driver for the rising cost of living in the UK, according to a BBC report.

“We don’t think profits are excessive”, says Jonathon Brearley. But how can they be reasonable, when energy bosses themselves can’t even attempt to justify the scale of their salaries?

Dealing with high business energy…what’s the answer?

Pay more, and earn less? Sacrifice profits, and risk the future of your business? Or raise prices to cover the costs, and risk losing customers?

A survey of business owners conducted by the PwC revealed that 77% of respondents have had to raise the price of their products and services over the past two years due to energy-related expenditures.

 There’s no easy fix when it comes to these energy companies, who continue to make profits from the death of business. All too often we see the narrative of rising energy costs until businesses are forced to close, such as 5-star reviewed restaurant Bouchon in Liverpool, which was forced to close at the hands of “the robber barons at the utility companies”, unable to keep up with the rising costs.

IEG Commercial Solar Offers A Solution

With solar, you’ll be less at the mercy of companies like Centrica, who continue to make apparent ‘reasonable’ profits, whilst raising bills extensively.

37% of businesses report that high energy expenses have delayed their efforts to decarbonise operations. But with IEG, we have finance solutions and payment plans starting from just £200 per month, as we believe everyone should have access to the benefits of solar.

With solar from IEG, you’ll get a bespoke fitting and achieve energy independence. Plus, with battery storage, you can make the most of your solar panels and keep making the most of the sun – even when it goes down.

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