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Centrica has recorded an 82 per cent increase in bad debts as the impact from the energy crisis and rising bills continues to reverberate despite wholesale prices easing.
The owner of British Gas, Britain’s largest household energy supplier, said debts, termed bad because they are unlikely to be recovered, had climbed to £541mn for the year ending December 2023, up from £297mn in 2022.
The FTSE 100 company added that growing customer debt, which includes households and businesses, had pushed up its “overall credit and liquidity risk”.
“Cost of living challenges, high levels of fuel poverty and relatively high inflation [are] impacting our customers’ ability to pay for their energy supply,” it said.
Centrica reported the debt figures alongside its annual results, posting an overall 17 per cent dip in annual adjusted operating profit, from £3.3bn in 2022 to £2.8bn in 2023.
Despite the profit fall and debt levels, it still plans to increase its full-year dividend by a third to 4p per share, rewarding hundreds of thousands of retail investors.
That helped buoy shares, which rose 3 per cent to 138.20p by late morning on Thursday.
Customer debt levels are a concern to regulator Ofgem, which is preparing to allow suppliers to increase the amount they charge to help cope with the costs.
Chris O’Shea, Centrica’s chief executive, said when “doubtful debt” was added to “bad debt”, the figure rose to £1.3bn at the end of 2023. He said these are “people that we think are struggling to pay and might continue to struggle”.
Household energy bills leapt to record highs at the start of 2023 due to high wholesale gas prices linked to Russia’s full-scale invasion of Ukraine in February 2022, prompting the UK government to intervene to help households.
Wholesale prices have since eased and energy bills have dropped, but blanket energy bill support has fallen away, meaning many households are still under severe strain.
O’Shea said: “As customers get into trouble we encourage them to give us a call so that we can get them into payment plans.
“First and foremost, my concern about bad debts is about the impact on customers who are unable to pay their energy bills.”
Profits for British Gas, which serves about 7.5mn households, climbed to £751mn in 2023 compared with £72mn in 2022, although that was driven by a one-off recovery of costs incurred during the energy crisis.
Centrica said British Gas’s profits would otherwise be closer to £150mn to £250mn, which it believes is a normal level.
The company’s overall profits reignited anger from Unite, the trade union, which said households and businesses were being “ripped off by the profiteers in our energy supply chain” and called for energy companies to be nationalised.
Centrica has yet to resume forcibly fitting energy pre-payment meters in households after suspending the activity last year after vulnerable customers were cut off from their energy supply.
O’Shea said it had “done a lot of work” over the past year to bring the work in-house but had not yet asked Ofgem for permission to restart.
He also confirmed the company was interested in investing in the Sizewell C planned nuclear plant in Suffolk.
“We are involved in that process, and we could be interested in investing in that, but the risk and reward return has to be right,” he said. Centrica owns a 20 per cent stake in Britain’s existing nuclear fleet.
