Russia’s war against Ukraine and the subsequent restriction of its supplies to Europe caused a huge increase in the price of natural gas. Chief executive Chris O’Shea has warned that the UK faces “a tough winter” amid predictions that the average annual UK household energy bill could soar to £4,000 early next year, with the most vulnerable houses to pay £500 in January. The charity Citizens Advice said on Thursday it had already seen more people seek help with energy in the first half of 2022 than in the whole of 2019 or 2020, including “unprecedented” numbers who could not afford to fill up meters prepaid and so they could not turn on their fridge or cook. O’Shea defended Centrica’s move to restart its dividend, arguing that the past year proved the need for strong energy companies after the collapse of dozens of smaller UK energy suppliers. “I know it’s hard to see the words ‘dividend’ or ‘profits’ when people are suffering,” he said. He also pointed to the new windfall tax on energy groups, saying Centrica was paying “well over £600m”. Operating profit at the UK’s biggest energy retailer jumped to £1.3bn in the first half of the year from £262m in the same period in 2021, boosted by higher income from oil assets, natural gas and nuclear power. It will pay a dividend of 1p per share, totaling £59m. O’Shea acknowledged customers were “struggling” and called for more action from the government, which launched a £15bn support package for households in May when bills were forecast to rise to around £2,800 – a level now far lower than what the bills are expected to reach. “Look at the average household income in the UK [and] you can see it’s going to put a lot of pressure on people,” O’Shea said. The UK’s median household income is around £31,400 after tax, according to the Office for National Statistics. “We are waiting to see if there will be more [government] intervention. We are asking for more support for consumers,” he added. Oil has also risen since the invasion, fueling the gains of the biggest energy groups. Shell, Europe’s biggest oil company, on Thursday reported an adjusted profit of $11.5 billion in the second quarter of the year, breaking the record of $9.1 billion recorded in the first quarter. It also announced a $6 billion share buyback. Several countries, including the UK, have imposed additional taxes on energy companies this year, but another round of record profits for oil majors could lead to calls for additional levies. BP is also expected to reveal strong performance in the coming days. Rishi Sunak, the former UK chancellor who is running for the leadership of the Conservative party, said the windfall tax he introduced was “the fair and right policy, given these record profits that energy companies are seeing”. However, Lib Dem leader Ed Davey called for a “much tougher windfall tax to provide the funds to help millions or people through what will be the hardest winter for generations”. Frances O’Grady, general secretary of the TUC union, described the energy groups’ “stunning profits” as “an insult to the millions of workers struggling to make ends meet due to skyrocketing energy bills” and called for “real action” reduce such costs. At Centrica, operating profit at the British Gas Energy division of the business fell 43% to £98m, due to the need to buy gas and electricity for new customers for which it was unable to compensate in advance. Natural gas prices are now trading at about 10 times the average level of the past decade. “The source of our profits is not rising customers’ energy bills,” O’Shea said, claiming that in the first half of the year Centrica averaged just £6 per UK household supplied, with the can charge heavily governed by a UK price cap. However, the company benefited from rising wholesale electricity prices from its stakes in nuclear plants and from its North Sea oil and gas assets. O’Shea refused to confirm whether the UK could face gas shortages this winter if Russia cuts exports completely, saying only that “we’ll have to see how the winter goes”. But he stressed that the company had secured additional contracted volumes of natural gas from Norway and was in the process of trying to restart the Rough offshore storage facility – which the company shut down in 2017 – to boost the UK’s security of supply.

The UK is less exposed to direct Russian gas imports from mainland Europe, but can rely on pipeline shipments from Belgium and the Netherlands for around 15% of supplies on colder days, so shortages in Europe could potentially have a negative effect. O’Shea said discussions with the UK government about restarting the Rough were continuing apace, but he could not commit that the facility would be ready for this winter. He said the company estimated that Rough could have saved consumers around £100 on their bills last winter if it had been operational. Centrica is not seeking government support to fund the costs of restarting the facility. “I believe it could transform security of supply in the UK and also reduce customers’ bills,” he said. At group level, adjusted earnings before interest, tax, depreciation and amortisation, including oil and gas-producing assets, rose to £1.66bn in the first half of the year, from £682m in the same period in 2021. Adjusted earnings per share, which strips out the impact of write-offs and other one-off charges, jumped to 11p from 1.7p. Additional reporting by Delphine Strauss and Jim Pickard