Owner of British Gas Centrica plans voluntarily limit skyrocketing profits in attempt to cut household bills and defuse resentment over them, the Keeper can reveal.
CEO Chris O’Shea said he was interested for Centrica become “first company” in sign up to new renegotiation of contracts with in government on its electricity generation, amid controversy over sudden profit.
As part of Liz Truss freezes £150bn electricity, renewables and nuclear bills power Generators will be asked to supply electricity below current market rates – but new prime minister refused to introduce a contingency tax on them.
Ministers plan to “negotiate” with generators on older wind, solar and nuclear power contracts that benefited from windfall earnings as price of the gas took off to convince them switch to newer less profitable deals that block in cut prices in come back for guaranteed long-term income.
As well as being the UK’s largest supplier of gas and electricity to the house via British Gas, Sentrica also a big generator via its 20% stake in British nuclear power stations.
O’Shea said Centrica is ready switch five nuclear power plants in new style treaties. He said he was even ready to paint up long-term contracts with in government for Centrica gas fields in the North Sea that are not covered by the initiative and already was taxed on windfall profits announced before that year then Chancellor Rishi Sunak. Oil and gas production in the North Sea is not currently receive subsidies.
O’Shea said he discussed the industry-backed idea. body UK Energy, with in government and negotiations are ongoing. “We in this is business for for a long time term. Were not in this is business to maximize our profit is year,” he said.
Energy companies supported “contracts for difference” (CfD) sentences that give investor confidence over levels of the income they can receive, perhaps years after the energy crisis has eased.
However, the Resolution Foundation warned that policy risked “delay but block in unexpected gains. There are concerns that government negotiation team led by former head of Working Group on Vaccines, Madeleine McTernan, in weak position as it will be need persuade producers to abandon high-term prices.
O’Shea declined say what proportion of her profits he was willing to give up or how much the company hopes to gain from government. He told The Guardian: “Sometimes if you go to government and suggest you take a lower price they look at you like there must be something else in it for you.
“We obviously in this is business create value for all of our stakeholders, customers, country [and] colleagues. But it’s not about maximizing this year’s profits; it’s about longterm stable business.
“We supply more than 8 m homes and business in United Kingdom with energy – if they can’t afford their energy, we don’t have sustainable business. And so, if we think about it holistically… if we put something like cfd mode in place for existing assets then, God forbid, if it ever happens again and we see prices go where they go, there is an automatic adjustment mechanism.”
O’Shea called “risky” nature of commodity markets may freeze over investments. “If you put floor on in price what can be achieved, you eliminate a huge amount of risks, he added.
Centrica owns 20% of shares in British nuclear fleet through a joint venture with French EDF, which also understand what supports of suggestions.
Scale of the windfall benefit from higher gas prices was highlighted in July when Centrica reported first-half operating profit of £1.3bn and handed over £59m to shareholders. The company said it saw 11% growth. in volumes of nuclear power generated in in first half of 2022. He said price achieved for nuclear power rose from £46.5 per MWh. in 2021 to £110.4 per MWh.
Company posted surge in half-year profit from division containing its exploration and production, as well as nuclear operations – reach 906 million pounds, up from 75 million pounds.
O’Shea said alternative proposals to cap wholesale gas prices could “distort market en masse and have vicious consequences.”
When asked if he supported the CfD’s proposal to protect off potential contingency tax, O’Shea replied: “The contingency tax nature this is one-off. Is not fix structure of in market. we are trying solve same issue in a way it’s sustainable.”
British Gas last month announced he will donate 10% of your profit help his poorer clients rule rising gas and electricity bills for duration of energy crisis.
