Gemma Hatvani has worked in the energy industry for 20 years but hasn’t seen anything like the past few months, as households with difficulties flock to her Facebook-based service Energy Support and Advice UK.
“It’s horrible. . . the demand of people who need food packages, top-up vouchers . . . I know we hear that word a lot, but it’s unprecedented,” said Hatvani, a former business analyst at energy company Eon.
Public and political anger at electricity and gas retailers in the UK – who, as consumer-centric companies, often bear the brunt of anger at the broader energy industry – has already mounted after the violent installation of expensive prepaid meters in the homes of vulnerable Britons was revealed this month became a gas customer.
However, executives are braced for a further buildup of criticism as the parent companies of some of the country’s largest suppliers prepare to announce record 2022 results in the coming weeks.
Centrica, owner of British Gas, has previously announced that it expects adjusted earnings per share to increase nearly eightfold in 2022, when it reported on Thursday. Analysts are forecasting net income of around £1.97 billion, its best results in a decade, according to Bloomberg data. In November, the company launched a £250m share buyback, its first since 2014.
Others have released similarly robust numbers in recent quarters. ScottishPower, owned by Spain’s Iberdrola, grew its revenue by 12 per cent to nearly £1.3bn in the first nine months of last year.
Most of the profits of the big providers do not come from the sale of electricity and gas to households, but from other sectors such as gas production under the North Sea, electricity generation from nuclear power plants or wind farms and energy trading.
The UK retail energy market is losing overall. Even many of the larger energy companies are making losses selling electricity and gas to homes.
But where companies make their profits doesn’t matter to disadvantaged households, say fuel poverty activists. Record results from oil giant Shell, which has a utility arm in the UK, have already sparked calls for windfall taxes on energy companies to be increased.
“At the end of the day, the reasons for the high costs lie with the same energy companies,” said Simon Francis, coordinator of the End Fuel Poverty Coalition. “It could be another division of this energy company, but . . . They are still owned by the same company.”
Analysts warn the challenge will be particularly acute for Centrica, although it apologizes for the “deeply disturbing” behavior uncovered by a Times investigation into forced installations of prepaid meters.
“The PR course that Centrica must navigate has arguably gotten more difficult,” said Martin Young, an analyst at Investec.
Centrica, which declined to comment, is expected to explain Thursday how much it will contribute to the Treasury in windfall taxes. The government has introduced levies on both fossil fuel producers and electricity producers to fund the reduction in household electricity bills.
Energy executives recognize that high profits for some energy companies will be difficult to explain in the context of the cost of living crisis. But they say the results of a handful of big companies mask deeper problems in retail, whose ranks halved after spikes in wholesale gas prices from 2021 caused the collapse of more than 30 loss-making suppliers.
Industry insiders warn that the state of the retail market has gotten so bad that many companies are looking to quit. Shell has previously said it is considering withdrawing from energy supplies in the UK and elsewhere in Europe.
“Many companies either regret moving in [retail] or trying to get out of it,” said a senior industry leader.
Emma Pinchbeck, chief executive of trade association Energy UK, says the industry as a whole is not good at serving customers and doing other things such as B. Investing in new technology to help Britain meet emissions targets, unless it’s “sustainable and feasible”.
Energy UK is asking the Government to: a promised ‘Root and branch’ review of energy retail to prevent the industry from reeling from one crisis to the next.
“If you [retailers] To make money, they can invest in things like customer service. . . and all the things they are already doing but now have to do on a massive scale because of the gas price crisis and the sheer volume of people struggling with bills,” Pinchbeck said, although she added that there was no excuse for these behaviors , uncovered by contractors for British Gas.
Energy UK is also urging the Government to put in place a “contingency plan” to help budgets for the remainder of 2023 and 2024. If households continue to run up large amounts of bad debt, it could lead to more supplier defaults, Pinchbeck warns.
This would involve an extension of the Government’s current support for energy prices, capping a ‘typical bill’ at around £2,500 a year, as it did over the winter, rather than the Government’s plan to raise it to £3,000 a year from April year trying to reduce subsidies.
Hatvani has worked for both a supplier and consumer and has seen both sides of the industry.
“I talk to the energy companies and quite often I start by saying, ‘You can’t treat people like that,'” she said.
But she added: “For every customer they sign up, they lose money. Instead of spotlight [being] at the energy suppliers. . . the spotlight should be on the producers.”
https://www.ft.com/content/044cfb57-7481-4bde-9fb4-2dada6f8af26 Energy traders struggle with PR crisis