The UK division of the French energy giant EDF returned to profitability in 2022, aided by its ability to offer electricity at a higher price.
The difference between a loss of £21 million in 2021 and a profit of £1.12 billion in 2022 was primarily due to the better performance of its nuclear electricity generators.
However, its UK consumer electricity supplier lost over £200 million during the year.
EDF cited the expense of purchasing energy for customers, which exceeded the energy price cap, as the reason for the increase.
The Energy Price Guarantee limits the yearly average household electricity and gas costs to £2,500.
EDF, which provides gas and electricity to approximately five million British households, is currently 84 percent owned by the French government and will soon be completely nationalized.
It runs five nuclear power plants in the United Kingdom and has a substantial number of wind farms.
Unlike generators that depend on gas to generate electricity, it benefited from higher electricity prices on wholesale markets in 2022, which led to a substantial increase in revenues with no corresponding increase in expenses.
Companies cannot offer their energy at a discount to their customers due to competition laws.
The firm reported investing over £2.6 billion in its UK nuclear, renewables, and customer businesses in 2022.
It announced plans to spend an additional £13 billion in the United Kingdom over the next three years, primarily at Hinkley Point C, the new nuclear power station being constructed in Somerset and scheduled to open in 2027.
Approximately £2 billion will be invested in its current nuclear fleet and renewable energy initiatives.
The EDF Group incurred an underlying loss of €4,99 billion (£4.44 billion) in 2022 due to “the decline in nuclear output” and “the effect of exceptional regulatory steps to limit price increases for consumers in 2022.”
The latter alludes to a price cap imposed by the French government on consumer prices, which resulted in EDF selling the electricity for less than it paid for it.
This cost the group €8.2bn (£7.3bn) in the year, which essentially offset the €8.7bn (£7.8bn) it earned from “passing on market price increases to customers.”
The record loss of nearly €5 billion comes as the company nears its takeover by the French government, which is scheduled to be completed in May.
The figure led the company’s newly appointed chairman and CEO, Luc Rémont, to concentrate on prospects rather than past issues.
He stated, “Our current priority is to improve EDF’s financial situation. And I am confident that the benefits of our actions will begin to manifest in 2023.”
Business correspondent Peter Ruddick provides an analysis
Another day, another billion-pound windfall for the energy industry. Nevertheless, it is another day in which the full story is more complicated than the headline might indicate.
Last year, EDF genuinely lost money on a global scale. It faced significant issues with its French nuclear arsenal. In the United Kingdom, the retailer that serves five million households also recorded a loss.
The electricity-generating division of the business, however, had a prosperous year. It profited from both the high wholesale energy price and the absence of gas-related expenses.
According to the business, this is an investment story. It is investing billions in nuclear electricity in the UK. Additionally, it will be liable to a new tax on electricity generators that was implemented last month.
Regardless of how the numbers are sliced and diced, some activists argue that these profits, which come at a time when people are struggling to pay their household expenses, demonstrate that the system is broken and that the government’s reaction is too little, too late.
“Outstanding earnings”
Since oil and gas prices spiked in response to Russia’s invasion of Ukraine, energy companies’ profits have soared.
The owner of British Gas, Centrica, reported record profits of £3.3bn for 2022 on Thursday. But only £72m came from the portion of its company that provides energy to UK households.
High gas and energy prices are burdening many households, prompting calls for corporations to pay more tax.
Energy Security Secretary Grant Shapps stated that energy companies need to “do more” and that their “extraordinary profits” contrast starkly with the high customer bills.
In April, the Energy Price Guarantee will increase from £2,500 per year for the average family to £3,000 per year. This will result in a rise in energy costs.
British Gas debt collectors broke into vulnerable people’s homes to place prepayment metres this month. It has led to the exposure of numerous similar incidents.
Ofgem, the energy authority, has ordered suppliers to stop installing forced prepayment metres until March.
