The largesse of British Gas and it’s near £1bn six month proffit

I recently posted on Facebook about BG and it’s 900% increase in profits and received some pushback about why I thought it was unreasonable, here’s my reply –

Firstly I do not blame BG for this in anyway, they are a private company with a sole aim of maximising returns for their shareholders, it is the government’s responsibility to put in place a policy framework through regulation and tax to ensure that they create an ecosystem that allows all to thrive (or one that gets them re-elected depending on your views)

I think you’re missing the point I make, the retail price BG (and all the others) sell at appears to be completely uncorrelated to the underlying cost of the product they supply.

The long term cost is around £70 per therm, this is also the current price. For the period from late 2021 until early 2023 the average rate trebled to around £225 (with a peak far higher but equally a trough far lower).

Bearing in mind the cost of the underlying gas makes up only a part of the total cost of running BG the price cap doubled in this time, the result of this was BG’s proffit went from a net zero over the period 2017-2021 to £100m in the first six months of 2022 and to £1Bn in the first six months of 2023 so it must be assumed that their costs (inc raw material i.e. gas) did not rise as much as their retail price and in reality their margin increased from a net zero to around 900%. (great for their shareholders)

The result of this for many in our society is that they’ve been unable to heat their homes and have in effect been thrown into energy poverty by a private organisation allowed by a government in power to increase its profits at the expense of those in our society least able to afford it.

IMHO this is wrong, if we as a society think this is right then that’s fine but do we?

You asked do I think making £13 per consumer per month is wrong? absolutely not, as I said at the beginning BG is a private company and its aim should be to maximise profits and consequently shareholder returns. Turning them into a charity (or other non-profit) doesn’t solve the problem, the market sets the retail price (constrained by regulation – e.g. the price cap) that allows them to increase their profit margins.

Whilst energy in the uK is delivered by a small collection of big players (also known as an oligopoly) then this will continue because the government (of all political sides) allow it to.