UK Big Six energy firms made more than £1bn in profit ahead of price hike
Exclusive: Analysis of most recent accounts shows huge profits as customers face soaring energy bills
The UK’s Big Six energy companies raked in more than a billion pounds of profit ahead of this year’s record hike in bills.
The highest earner, SSE, made £600m alone in profit before taxes, according to annual accounts published by the energy regulator Ofgem. Last month, the Scottish energy company was forced to apologise for advising customers to “do star jumps” to keep their energy bills down.
Scottish Power and Centrica, which owns British Gas, made a further £423m before tax between them. EDF Energy and E.ON recorded losses of £154m and £198m respectively.
The figures are the most recent available, and cover either 2020 or the 2020/21 financial year.
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Energy bills are set to soar in April after Ofgem announced it would increase the maximum rate suppliers could charge by 53%. It said the rise reflected the fourfold increase in energy market prices over the past year.
Households on an average dual-fuel energy tariff will face a rise of £693 a year. But the poorest, who are more likely to use pre-paid meters, will be hit with a steeper hike of £708 a year. Some low-income customers are unable to move from meters to automatic payments – on which suppliers offer discounts – because they require credit checks.
Britain is already in the grip of a cost of living crisis. In December, inflation jumped to 5.4%, its highest level in almost 30 years. All areas of daily life, including food and clothing, have seen prices rise since 2020, with transport costs alone rising as much as 12%.
Poorer households will be worst affected by the squeeze. As a proportion of their income, the lowest-income families spend twice as much on food and housing bills as the richest, according to research by the Resolution Foundation.
High prices as far as the eye can see – this year, next year and the year after that
Wages have failed to keep up, with inflation-adjusted pay falling in November to below the pre-financial crisis peak for wages recorded in 2008. Average pay is expected to shrink this year as workers are hit with a rise in National Insurance contributions in April.
The bosses of the Big Six energy firms remain some of the highest earners in the UK. In 2019, the BBC reported that the former Centrica chief executive was paid £2.4m in 2018, a 44% rise on the previous year.
Alistair Phillips-Davies, CEO of the UK’s third-biggest energy company, SSE, made £1.6m in the first year of the pandemic, according to a report by the High Pay Centre. SSE was acquired by the Bristol-based supplier OVO Energy in 2020.
The energy company was criticised last month for advising customers to keep their heating bills low by “having a cuddle with your pets”, eating “hearty bowls of porridge” and “doing a few star jumps”.
The government announced today that households will receive a one-off £200 discount and a rate on council tax bills as part of a package designed to “take the sting” out of the rise in energy bills.
Rishi Sunak said that all households would receive £200 off their energy bills in October – but that they would then pay the discount back in £40 instalments over the subsequent five years.
The chancellor also said council taxpayers in England in bands A to D would receive a rebate of £150 from their bills in April, which will not have to be paid back.
Shadow chancellor Rachel Reeves said Sunak was offering consumers a “buy now, pay later scheme that loads up costs for tomorrow”.
The result of Sunak’s proposals would be “high prices as far as the eye can see – this year, next year and the year after that – giving with one hand and taking it all back later”, she said in the House of Commons.
Frances O’Grady, the general secretary of the Trade Union Congress (TUC), argued the measures announced by the chancellor were “hopelessly inadequate”.
She added: “For most families, it’s just £7 a week and more than half must be paid back. It’s too little, it’s poorly targeted, and it’s stopgap measures instead of fixing the big problems.”
Update, 19 April 2022: This article was amended to reflect that E.ON made a loss of £198m.
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