Energy companies collected £30 billion in profit last year, with overseas magnates and other nations emerging as major beneficiaries, according to an investigation by the Unite union. The union asserts that “excessive profits” are a key factor in the persistence of high energy costs, leading to an annual burden of £500 per average household. Unite’s general secretary, Sharon Graham, expressed frustration, stating, “It’s time to take control of this situation.”
Unite’s suggestions involve the reacquisition of the energy system, a move that might be viewed as radical by some. However, the union argues that the cost of approximately £90 billion aligns with three years’ worth of profits. The study conducted by Unite scrutinized the financial records of 165 companies, including the largest power producers, energy suppliers, and gas/electricity transmission entities holding licenses from Ofgem for Britain. It revealed that the industry’s average pre-tax profit margin in the past year was 23%, significantly higher than the average margin of 7.2% in other non-financial sectors.
Among the findings, gas producers boasted the highest profit margin at 53%, while companies supplying energy to households and businesses had a typical margin of 5%. This revelation comes at a time when energy costs for both families and businesses are soaring. Unite highlights that household electricity prices in the UK surpass the European average by a considerable margin. In contrast, the UK faces the highest industrial electricity expenses among developed nations, making it challenging for local businesses to compete globally.
In response to these challenges, the Labour party recently announced measures to aid high-energy-consuming businesses, such as steel and glass manufacturers, by offering a more generous 90% discount on their electricity network charges. Unite’s report underlines the UK’s increasing reliance on imported gas due to declining North Sea supplies, with over 40% of imports coming from Norway. The report also notes the substantial profits flowing back to countries like Norway, the US, and Qatar due to growing liquefied natural gas imports.
Unite’s examination further revealed the significant influence of affluent individuals in Britain’s energy sector ownership. Companies controlled by or associated with these individuals amassed profits totaling £4.2 billion last year. Notably, Hong Kong’s wealthiest man, Li Ka Shing, holds a major stake in UK Power Networks, while Czech billionaire Daniel Kretinsky oversees EP UK Investments, which operates several power stations in the UK.
Despite criticisms of Labour’s net zero initiatives, Unite emphasizes that environmental levies constitute only a third of the profits generated. Sharon Graham emphasizes the need for public ownership to regain control of the energy system, stressing the importance of transitioning from a deregulated market to a structured Industrial Strategy foundation.
Dhara Vyas, CEO of Energy UK, underscores the necessity of investing in critical national infrastructure within the energy sector. The industry’s investments surged to £24 billion in 2024, a 28% increase from the previous year, with one in 25 UK jobs linked to the energy field. Vyas warns that without a supportive regulatory framework, the UK risks heightened dependency on global fossil fuel markets, jeopardizing energy security and exposing households and businesses to uncontrollable price fluctuations.