Centrica reports £1.3bn half-year profits

As Centrica reports a sharp jump in half-year profits, calls intensify for more government support to tackle rising energy prices

Centrica has reported half-year group profits of £1.3bn, a significant jump on the £242mn recorded in 2021, as it capitalised on high energy prices.

Buoyed by group total free cash flow from continuing operations in the six months to June 30 totalling £643mm (2021: £524mn), Centrica has reinstated a 2022 interim dividend of 1p per share

The completion of the sale of Spirit Energy Norway and the Statfjord field in May resulted in a £0.8bn reduction in gross decommissioning liabilities.

Group Chief Executive Chris O'Shea said it made significant progress de-risking the Group and building a stronger business. 

"This strength has allowed us to lead the industry in measures to protect and support customers through the most challenging energy crisis in living memory and the benefit of our balanced portfolio can be seen in our first half performance. We expect this to continue into the second half, underpinning continued investment in customer service and elsewhere in our portfolio," he said.

He added that it was "very aware" of the difficult environment many customers are facing and it will continue supporting them. British Gas recently announced an extra £2mn will be put towards money advice centres - adding another 20 - which will be funded by the British Gas Energy Trust, to provide more help to those struggling with living costs.

It is recruiting at least 500 additional UK-based customer service roles in British Gas Energy and 1,000 new UK engineering apprenticeships.

"We have a clear strategy to continue improving operational performance, to grow our business and to position ourselves to deliver net zero at a cost which helps the many, not the few," he said. 

"We are committed to investing in the energy transition which will improve the security of energy supply in our core markets.”

Energy price crisis 'ongoing and severe' and Ofgem 'failed to regulate'

The impact of the energy price crisis on households is ongoing and severe, particularly in the context of other considerable inflationary pressures, and is likely to cause an unacceptable rise in fuel poverty and hardship this winter, according to a recent UK Parliament report

It also singled out Ofgem for criticism, saying its failure to regulate and supervise the energy retail market over the last decade "significantly contributed to the collapse of 29 energy suppliers since July 2021".

With wholesale prices continuing to rise, the energy price cap is now expected to increase to well over £3,000 this winter, and to remain elevated thereafter. The scale of these price increases now renders the Government’s May 2022 support package insufficient.

"The Government needs to provide an urgent update to the support available to avoid a very serious crisis this winter," it notes.

"The Government will need to take an agile approach to delivering vital support to households as the situation develops. But enduring solutions are needed, including an urgent consultation on a social tariff and a far-reaching home insulation programme."

It recommends that the Government urgently sets up a cross-departmental taskforce, like the Brexit taskforce, to respond to the energy price crisis and wider cost-of-living.

Consumer champion Martin Lewis, speaking on BBC Radio 4's Today Programme, said the current prediction is for prices to rise 77%, on top of the 52% rise in April, taking a typical bill to £3,500 a year.

"That means year-on-year to October, a typical house will be paying £2,300 a year more on their energy bills alone - forget the rises with everything else. Rishi Sunak, Liz Truss, Boris Johnson - go and sit in a room together, make a collective decision now to what help you can give ... and give the panicking people across the country a little bit of respite on all this. Green levies and cutting VAT are trivial in the big picture."

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