E.ON, one of the UK’s largest energy suppliers, has said profits in its retail division more than doubled during 2023, after firms were granted allowances to hike consumer bills.
Adjusted pre-tax earnings increased in the supplier’s customer division by two-thirds from €1.7 billion (£1.45 billion) to €2.8 billion (£2.4 billion) over the year, E.ON reported on Wednesday.
This was driven by “one-off effects” relating to regulation in the UK, the group said, with Ofgem having allowed firms to charge consumers more earlier in the year through bills.
Though this was designed to allow energy suppliers to recoup debt from earlier in the energy crisis, British Gas and E.ON have both recorded soaring profits thanks to the allowance, which appeared in Ofgem’s price cap.
Across all of its divisions, E.ON recorded a 16% increase in adjusted pre-tax earnings to €9.4 billion, prompting the energy company to hike planned investments in mainland Europe from €33 billion to €42 billion for the next four years.
A €0.53 per share dividend was also proposed for 2023 on the higher profit, compared to €0.51 a year earlier.
“We again defied challenging circumstances in the financial year 2023,” chief executive Leonhard Birnbaum commented. “We again delivered very good results that exceeded our expectations.”
Ofgem's next price cap, which will see households pay less than current rates between April to the end of June, will include provisions for energy suppliers to claw back debt once again through bills.
This will equate to £28 per household on an annualised basis and is set to be footed by households on direct debit and standard credit deals.