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The Unite union says much of the profits made by energy companies in the UK goes to foreign governments and mega-wealthy investors
Energy firms raked in £30billion profit last year – with foreign tycoons and other countries among the big winners, an investigation by the Unite union claims.
It says “excessive profits” are one reason why energy bills have remained high, and costing the average household £500 a year each. Unite general secretary Sharon Graham fumed: “It’s time to get a grip on the mess.”
The union’s proposals include renationalising the energy system. While likely to be seen as radical by many, Unite says the cost of around £90billion equates to three years’ profits.
Unite analysed the accounts of 165 companies, made of around 70 of the biggest power generation firms, the same number of energy suppliers, and 23 involved in gas and electricity transmission and distribution.
It limited its research to those with a licence from industry operator Ofgem for Britain, rather than the UK as a whole. It found the average pre-tax profit margin across the industry was 23% last year which, it says, compares with a typical 7.2% margin across a range of other non-financial sectors.
Gas producers were found to have the fattest profit margin, at 53% on average, and the firms supplying energy to homes and businesses the lowest, at a typical 5%.
It comes against a backdrop of sky high energy bills for families and companies. Unite says electricity prices for households are considerably more than the European average.
Yet in the early 2000s, prices here were the second lowest, it says. Meanwhile, the UK has the highest industrial electricity costs of any developed country, making it hard for firms to compete with foreign rivals.
It prompted Labour to announce last week it was helping some of the country’s most intensive business energy users – including steel, glass and cement makers – with a more generous 90% discount on their electricity network charges in a move ministers say will save £420million from next year.
With falling supplies of gas from the North Sea, Unite’s report says the UK is having to import much of its needs, with more than 40% of that coming from Norway.
And because Norway’s gas market remains largely state-owned, it says much of the profits that flow back – about £5.9billion last year- went to the Norwegian government. Growing imports of what is called liquefied natural gas means money also going largely to the US and Qatar, says the report.
When it comes to electricity, EDF is in charge of the UK’s nuclear power station. And EDF is owned by the French state. Meanwhile Orsted, which is heavily involved in UK wind farms, is just over 50% owned by the Danish government.
Unite also looked at the role of wealthy individuals in the ownership of Britain’s energy sector, and found that companies which they control or have stakes in generated £4.2billion worth of profit last year.
They include Li Ka Shing, Hong Kong’s richest man, who is the biggest shareholder in UK Power Networks and other distribution companies.
Another is Czech billionaire Daniel Kretinsky, whose empire now controls Royal Mail and who owns EP UK Investments, which operates a number of power stations here.
Unite says that, despite criticism of Labour’s net zero drive, the cost of environmental levies account for just a third of the money that goes in profits.
Ms Graham said: “Our energy system has been asset-stripped, sold off to foreign states, global multinationals and billionaires. Our proposals are simple and clear: take back control with public ownership. It’s time to close the chapter on deregulated market madness. That’s the foundation we need for a genuine Industrial Strategy.”
Dhara Vyas, chief executive of trade body Energy UK, which represents suppliers, generation and transmission firms, but not distribution companies said: “Businesses pre-tax in the energy sector achieved by ensure a safe, stable for Britain supply of energy, power the economy and drive growth.”
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