Millions handed energy lifeline as British Gas vows to cap profits

Government 'can sort out' energy cost crisis says expert

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The chief executive of British Gas owner Centrica, Chris O’Shea spoke of plans to voluntarily cap skyrocketing profits gained from the global energy crisis. He noted that in an effort to slash household bills and ease public outrage, the company was keen on becoming the first to sign up for new, renegotiated contracts with the Government on its electricity generation. On Thursday, Prime Minister Liz Truss announced that energy bills for the average household will be capped at £2,500 as she unveiled her plan to help Britons crippled by the crisis.

Speaking in the House of Commons, she also announced that renewable and nuclear energy generators would “move onto Contracts for Difference to end the situation where electricity prices are set by the marginal price of gas.

“This will mean that generators are receiving a fair price, reflecting their cost of production, further bringing down the costs of this intervention.”

Ministers are currently looking to negotiate with energy generators on older wind, solar and nuclear contracts, who have enjoyed record profits as the price of wholesale gas soared.

While the cost of wholesale gas has reached record levels around the world, the cost of renewable energy generation has been largely left unaffected by this energy crisis.

Despite the fact the UK generates about a quarter of its electricity from renewable sources, bills have skyrocketed, with many blaming this link between the price of gas and the price of electricity.

Under these new contracts, renewable generators would produce electricity at a fixed lower cost, but one that would guarantee them long-term income.

Through British Gas, Centrica is the UK’s largest supplier of household electricity and gas, and is also a major energy generator, through its 20 percent stake in the UK’s nuclear power stations.

Speaking to the Guardian, Mr O’Shea noted that Centrica is willing to switch the five nuclear plants to the new-style contracts.

He even added that the company was prepared to draw up long term contracts for the North Sea gas fields that Centrica owns.

These fields were not covered under Ms Truss’ announcements and were already subject to a major windfall tax announced by then Chancellor Rishi Sunak earlier this year.

Mr O’Shea noted that talks with the Government are ongoing, saying: “We are in this business for the long term. We’re not in this business to maximise our profit this year.”

Ms Truss’ announcement to freeze energy bills brought a sigh of relief for millions of Britons who were bracing for fuel poverty as industry regulator Ofgem’s £3,549 price cap was set to come into effect from October.

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Ms Truss said in the Commons: “This Guarantee – which includes a temporary suspension of green levies – means that from 1st October a typical household will pay no more than £2,500 per year for each of the next two years, while we get the energy market back on track.

“This will save a typical household £1,000 a year. It comes in addition to the £400 Energy Bills Support Scheme.

“This Guarantee supersedes the Ofgem price cap, and has been agreed with energy retailers.”

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