British Gas owner Centrica has warned that Rishi Sunak’s windfall tax will “damage investor confidence” as Britain tries to build up a supply of green energy.
Centrica Chairman Scott Wheway and Chief Executive Chris O’Shea have denounced the Chancellor’s 25% levy on oil and gas operators’ excess profits, which will be used to pay for measures to reduce soaring energy bills.
Centrica – Britain’s biggest energy supplier – said its annual operating profits had doubled to £948m in 2021, helped by an increase in revenue from its offshore oil and gas arm of the North. It expects to turn a healthy profit again this year.
Sunak hopes to raise £5billion from the tax, but a debate rages over the structure of the tax. An investment allowance as part of the tax allows energy companies to realize 91 pence in tax savings for every pound spent.
Labor called the allocation a ‘gigantic exit clause’ while analysts believe £8billion of oil projects could soon get the green light as a result of the measure.
Speaking at Tuesday’s annual shareholder meeting in Leicester, Wheway said: ‘We currently empathize with the plight of many customers, who are struggling to manage their energy bills, and we welcome measures to help these customers.
“But we also share a lot of concerns about the choices that can be made to apply taxes to energy production, which – although they can have short-term benefits – can cause problems in the medium and long term. , because we know that the industry we are in is a very long-term industry. And we urge anyone thinking about these things to find the right balance.
O’Shea waived his £1.1m bonus last year as the company slashed its dividend amid soaring household bills. He was paid £875,000 in salary and benefits.
Energy companies benefited from the supply squeeze, exacerbated by Russia’s invasion of Ukraine, which boosted their revenues. Centrica is trying to move towards greener energy supplies, while Sunak is considering extending the tax to electricity producers.
O’Shea said, “Clearly the energy market is changing rapidly. And the opportunities of this transition are enormous.
“However, the recent intervention in the form of a windfall tax in the UK is creating uncertainty and hurting investor confidence. And, as you all know too well, it’s up to you, our shareholders, to bear it.
O’Shea said the company was talking to the government “to make sure everything is fair.”
He added: “Over the long term, we must work with all stakeholders to protect the most vulnerable in society while encouraging the substantial investments needed to deliver a low-carbon future which, if we do it right, will create hundreds of thousands of new, well-paying green jobs that will help the economy grow.
O’Shea also reiterated calls for energy bosses to pass a ‘fit and suitable person’ test and protection of customer deposits after nearly 30 suppliers collapsed in the energy crisis.
Wheway was also forced to defend the nomination of former Home Secretary Amber Rudd, who joined Centrica’s board as a non-executive member in January.
A shareholder asked whether – given that the Tories had introduced an energy price cap and a windfall tax on the sector – a former minister should sit on its board.
Wheway said the board “reviews policy and remains politically neutral.” Former Santander UK boss Nathan Bostock has also joined the board. Wheway said: “I sit here with 100% confidence and tell you that our new board appointees, including Amber and Nathan, and others we have in the pipeline were selected because that we think they are the best people to do. these jobs…they bring skills and abilities that the business will benefit immensely.