Centrica reports steep decline in British Gas earnings

In the United Kingdom, Centrica, the parent company of British Gas, reported a notable drop in earnings for its energy supply division for the year 2024. The company announced that underlying earnings plummeted from £751 million in 2023 to £297 million in the last year. This substantial decline is largely attributed to the end of energy crisis allowance payments, which were previously permitted by the regulator Ofgem to help energy suppliers recover costs incurred during the energy crisis. The absence of these payments led to a significant reduction in revenue for Centrica's household supply division. In addition to the drop in earnings, Centrica experienced a loss in residential customers, shedding approximately 70,000 households and reducing its total customer base from 7.53 million in 2023 to 7.46 million in 2024. The wider Centrica business also faced challenges, with a reported 40% decrease in underlying operating profits, falling to £1.55 billion as compared to £2.75 billion the previous year. Statutory operating profits were similarly affected, decreasing from £6.51 billion in 2023 to £1.70 billion in 2024. These figures indicate a broader trend of declining profitability across the company's operations. In light of these challenges, Centrica's Chief Executive Chris O'Shea emphasized the need for the company to invest in energy transition and ensure affordability for customers. He expressed a commitment to improving the company's operations and acknowledged the necessity for responsible and profitable investments. Notably, Centrica increased its capital spending to £564 million in 2024, up from £415 million in the previous year. The company also announced a 13% increase in full-year dividends and an additional £500 million in share buybacks, indicating a strategy to enhance shareholder returns despite the declining earnings in its core business. Additionally, Centrica stated it remains in high-level discussions with the UK government regarding the redevelopment and expansion of its Rough gas storage facility. This facility, which could have provided critical support during the energy crisis, was noted to have the potential to save consumers over £5 billion if it had been operational at full capacity. The company believes that with support, expanding this facility can mitigate future price increases and provide more stability for the energy market in the UK. As households brace for an anticipated rise in energy bills due to increasing wholesale prices, the necessity for solutions such as enhanced gas storage becomes ever more crucial.