The CEO of British Gas owner Centrica would receive a £3.7 million bonus if the company achieved record profits in 2022.
Chris O’Shea, who has refused bonuses for the past three years, would also be paid £790,000 each year.
That comes at a time when millions of people are struggling to pay their energy bills, and debt collectors for the corporation are breaking into vulnerable people’s homes to install prepayment meters.
The firm recognized Mr. O’Shea for creating “shareholder value” and negotiating “regulatory and political challenges.”
Centrica’s profits for 2022 increased to £3.3 billion as oil and gas prices surged due to Russia’s invasion of Ukraine.
The data, revealed in February, fueled calls for energy corporations to pay more tax as interest rates rose, affecting consumers.
Mr. O’Shea stated it was “too early to have a conversation” about any potential reward.
Despite this, Centrica stated in its annual report released on Wednesday that it needs to pay bonuses to attract and retain leaders.
Mr. O’Shea turned down a £1.1 million incentive in 2021 owing to “client issues.” He also renounced bonuses in 2020 and 2019 due to the outbreak.
The energy business has recently come under fire after a Times investigation revealed that debt agents working for British Gas broke into vulnerable people’s homes to force-fit prepayment meters.
As a result, countless such incidents have emerged.
As a result, the energy regulator, Ofgem, has ordered all suppliers to stop installing forced prepayment meters. Courts in England and Wales also halted firms’ applications to install them.
Centrica claimed that it was “extremely disappointed” by the claims made against one of its contractors, Avarto Financial Solutions and that an investigation was being conducted.
Centrica’s high profits in 2022 were driven primarily by its nuclear and oil and gas activities rather than its British Gas retail division.
Centrica is unable to offer a discount on its gas to British Gas customers due to competition restrictions.
Centrica paid £1 billion in tax on its gains, £54 million of which came from the government’s windfall tax, known as the Energy Gains Levy, enacted last year. The levy is meant to recoup some of the firms’ recent “extraordinary” profits while also cutting household energy bills.
The government’s windfall tax solely applies to UK oil and gas extraction income. The current rate is 35%, but energy businesses must pay an additional 30% corporate tax and a 10% surcharge for 75%.
On the other hand, businesses might reduce their taxable income by deducting losses or investments. As a result, BP and Shell have paid little or no UK tax in recent years.
British Gas is committed to paying the windfall tax
Grant Shapps, Secretary of Energy Security, remarked that energy companies must “do more” and that their “extraordinary gains” contrast sharply with customers’ high expenses.
“That’s why the government interfered, imposing a new 35% tax on these revenues, which would contribute to the ongoing cost of living assistance,” he added, emphasizing his desire to see more energy company profits invested in green energy, which would “shield” customers from rising bills.
Mr. O’Shea noted that Centrica contributed £75 million last year to aiding British Gas customers, the UK’s largest power and gas supplier, providing “much-needed stability and assistance,” and that the proceeds would help the firm move to cleaner energy and reduce consumer bills “in the future.”
Centrica’s record profits were driven mostly by its nuclear and oil and gas divisions, as opposed to its British Gas energy supply sector, which contributed only £72 million. The company sold its Spirit Energy oil and gas subsidiary in May, contributing to the data spike.
According to competition restrictions, Centrica is forbidden to offer its gas at a discount to British Gas customers.
Indeed, British Gas’ profits dropped 39% last year compared to 2021 levels, thanks mostly to “voluntary donations” from customers and the repayment of vacation funds.
Centrica also revealed that it paid £1 billion in taxes on its 2022 profits, the vast majority of which was paid in the United Kingdom. About £54 million of that was paid due to the government’s windfall tax, known as the Energy Gains Levy, established last year to recoup some of the “exceptional” revenues made by firms and assist families in paying lower gas and electricity bills.
Centrica has announced a £300 million share purchase scheme, increasing the amount of money returned to shareholders.
Centrica is made up of two separate companies, one of which is profitable and the other which is not.
Consumers will undoubtedly be outraged if they see a company swimming in cash while deploying debt collection agencies to break into poor families and install prepayment meters.
Read Also: The UK is at risk, says Labour Party
Centrica is unable to sell the energy it produces to its retail consumers at a lower cost than competitors due to competition constraints, so what does it do with its embarrassment of riches?
It has already halted the agency in charge of installing compulsory prepayment meters. In addition, the firm expects to pay £2.5 billion in windfall tax by 2028, which many will consider insufficient.
It is the government’s responsibility to address it, not firms like Centrica, Shell, and BP.
