Energy companies amassed a £30 billion profit last year, with overseas magnates and foreign nations emerging as major beneficiaries, according to a probe by the Unite union. The union alleges that “excessive profits” are a key factor in the ongoing high energy bills, costing the average household around £500 annually. Unite’s general secretary, Sharon Graham, expressed frustration, stating, “It’s imperative to take control of this situation.”
Unite’s suggestions include the reclamation of the energy system. Although perceived as radical by some, Unite argues that the estimated cost of £90 billion corresponds to three years’ profits. The union scrutinized the financial records of 165 companies, encompassing major power generation firms, energy suppliers, and gas and electricity transmission and distribution entities.
The analysis was confined to companies licensed by Ofgem for operations in Britain, revealing an average pre-tax profit margin of 23% in the industry last year, significantly higher than the 7.2% margin observed in various non-financial sectors. Gas producers exhibited the highest profit margin at 53%, while companies supplying energy to households and businesses recorded a modest 5% margin.
This comes amid soaring energy costs for households and businesses, with Unite highlighting that electricity prices in the UK surpass the European average. In contrast, prices in the UK were among the lowest in the early 2000s. Additionally, the UK faces the highest industrial electricity expenses among developed nations, impairing the competitiveness of local businesses against international counterparts.
In response to the situation, the Labour party recently announced initiatives to aid high-intensity business energy users, such as steel, glass, and cement manufacturers, by offering a more substantial 90% discount on electricity network charges, potentially saving £420 million from the following year.
With dwindling gas reserves in the North Sea, the UK increasingly relies on imports, with over 40% sourced from Norway. As Norway’s gas market remains predominantly state-owned, a significant portion of the profits, approximately £5.9 billion last year, flows back to the Norwegian government. The escalating imports of liquefied natural gas primarily benefit the US and Qatar, according to the report.
Regarding electricity generation, EDF operates the UK’s nuclear power stations and is state-owned by France. Meanwhile, the Danish government holds over 50% ownership in Orsted, a major player in UK wind farm projects. Unite’s examination also delved into the involvement of affluent individuals in the British energy sector, revealing that companies under their control or ownership stakes generated £4.2 billion in profit last year.
Despite criticisms of Labour’s net zero agenda, Unite asserts that environmental levies contribute only a third of the profits in the sector. Graham emphasized the need for public ownership to reclaim control of the energy system, emphasizing a shift away from deregulated markets towards a strategic Industrial Strategy.
Dhara Vyas, CEO of trade body Energy UK, stressed the significance of investing in critical national infrastructure within the energy sector to ensure a stable energy supply, drive economic growth, and create jobs. The energy industry’s substantial investments in 2024, totaling £24 billion, underscore the sector’s vital role in supporting clean energy initiatives and maintaining energy security for the future.
