Energy companies made a profit of £30 billion last year, with foreign investors and other nations benefiting significantly, according to a study by the Unite union. The union asserts that these “excessive profits” have contributed to high energy bills, costing the average household £500 annually. Unite’s general secretary, Sharon Graham, expressed frustration, stating that it is time to address the situation.
Unite’s suggestions involve nationalizing the energy sector, a move that may be viewed as radical but is deemed feasible as the estimated cost of £90 billion equates to three years of profits. The union’s analysis focused on 165 companies, comprising major power generation firms, energy suppliers, and gas and electricity transmission entities with licenses from Ofgem for Britain.
The study revealed that the industry’s average pre-tax profit margin was 23% last year, significantly higher than the typical 7.2% margin in other non-financial sectors. Gas producers recorded 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 consumers and businesses, Unite highlighted that electricity prices in the UK surpass the European average. The country’s industrial electricity costs are the highest among developed nations, posing challenges for domestic firms competing with foreign counterparts.
In response to these issues, the Labour party announced initiatives to support intensive energy users, offering a 90% discount on electricity network charges to save £420 million starting next year. Unite’s report also emphasized the UK’s increasing reliance on gas imports, with over 40% sourced from Norway and significant profits flowing back to the Norwegian government.
The ownership landscape of the UK’s energy sector includes involvement from wealthy individuals like Li Ka Shing and Daniel Kretinsky, whose companies generated substantial profits last year. Unite emphasized that environmental levies account for only a third of the profits, calling for public ownership to regain control of the energy system.
Dhara Vyas, chief executive of Energy UK, stressed the importance of investing in national energy infrastructure to ensure a stable energy supply, drive economic growth, and create jobs. She highlighted the industry’s significant contributions to clean energy investment, emphasizing the need for regulatory support to secure future energy security and reduce dependence on volatile global markets.