Energy companies accumulated £30 billion in profits last year, with foreign magnates and other nations emerging as major beneficiaries, according to an investigation by the Unite union. The union argues that “excessive profits” have contributed to the persistently high energy bills, costing an average household £500 annually. Unite’s general secretary, Sharon Graham, expressed frustration, calling for action to address the situation.
Proposals put forward by Unite include the nationalization of the energy system, a move deemed radical by some but justified by Unite citing the cost of around £90 billion being equivalent to three years’ profits. The union scrutinized the financial records of 165 companies, comprising major power generation firms, energy suppliers, and gas and electricity transmission and distribution entities.
Unite’s research focused on companies licensed by Ofgem for Britain, revealing an industry-wide average pre-tax profit margin of 23% last year, significantly higher than the 7.2% margin observed in other non-financial sectors. Gas producers were found to have the highest profit margin at 53%, while firms supplying energy to households and businesses had the lowest margin at 5%.
Amidst soaring energy costs for households and businesses, Unite highlighted that UK electricity prices exceed the European average, a significant shift from the early 2000s when prices were among the lowest. The UK faces the highest industrial electricity costs among developed nations, posing challenges for local businesses to compete internationally.
In response to the situation, the Labour party recently announced support for intensive business energy users, such as steel, glass, and cement manufacturers, offering a 90% discount on their electricity network charges to save an estimated £420 million from the following year. With declining North Sea gas supplies, the UK increasingly relies on imports, with over 40% sourced from Norway.
Furthermore, Unite’s report indicated that profits from gas imports largely benefit countries like Norway, the US, and Qatar due to their significant roles in supplying liquefied natural gas. Notably, key players in the UK energy sector include EDF, managing the country’s nuclear power stations under French state ownership, and Orsted, with over 50% ownership by the Danish government, heavily engaged in UK wind farms.
Unite also shed light on the influence of wealthy individuals in the energy sector, revealing that companies linked to them generated £4.2 billion in profits last year. Notable figures include Li Ka Shing, Hong Kong’s wealthiest individual with a major stake in UK Power Networks, and Czech billionaire Daniel Kretinsky, whose holdings include Royal Mail and EP UK Investments operating multiple power stations.
Despite criticisms of Labour’s net zero agenda, Unite emphasized that environmental levies constitute only a third of the profits generated. Sharon Graham emphasized the need to reclaim public control over the energy system, denouncing the trend of foreign ownership and billionaire influence, advocating for a return to public ownership to establish a robust Industrial Strategy.
Dhara Vyas, CEO of Energy UK, stressed the importance of investing in critical national infrastructure within the energy sector, highlighting its role in ensuring a reliable energy supply, powering the economy, and driving growth. Vyas underscored the significance of private sector investment in clean energy, warning that without supportive regulatory and policy frameworks, the UK risks heightened dependence on volatile fossil fuel markets, jeopardizing energy security for households and businesses.