EDF's UK Profits Soar After Electricity Price Hikes

French energy giant EDF's UK arm returned to profit in 2022, boosted by it being able to sell the electricity it generated for a higher price.

Underlying profit was £1.12bn, compared with a loss of £21m in 2021 mainly down to improved performance from its nuclear electricity generators.

But its UK consumer energy supplier lost more than £200m in the year.

EDF blamed the cost of buying energy for customers which was higher than the prices set under the energy price cap.

The Energy Price Guarantee caps the average household cost of electricity and gas at £2,500 annually.

EDF, which supplies gas and electricity to about five million UK households, is 84%-owned by the French state, but will soon be fully nationalised.

It operates five nuclear power stations in the UK as well as having a large number of wind farms.

Unlike generators who rely on gas to produce power, it benefited from higher electricity prices on wholesale markets in 2022 which brought it a big increase in revenues without an equivalent rise in costs.

Due to competition rules, companies cannot sell their own energy at a discount to their own customers.

The company said it invested more than £2.6bn in 2022 in its UK nuclear, renewables and customer businesses.

It said it planned to invest a further £13bn in the UK in the next three years, largely at Hinkley Point C, the new nuclear power station being built in Somerset that is due to open in 2027.

Some £2bn will be invested in its existing UK nuclear fleet and renewables projects.

The EDF Group posted an underlying loss for 2022 of €4.99bn (£4.44bn) blaming "the decline in nuclear output" and "the impact of the exceptional regulatory measures to limit price increases for consumers in 2022".

The latter refers to a cap on consumer prices imposed by the French government meaning EDF ended up selling the electricity at a lower price than it paid for it.

That cost the group €8.2bn in the year, it said, which effectively wiped out the €8.7bn it made from "market price rises passed on to customers".

The record loss of almost €5bn comes as the company gets close to becoming fully owned by the French government, with the takeover expected to be completed in May.

The figure prompted the firm's chairman and chief executive Luc Rémont, appointed in November, to focus on future prospects rather than past problems.

"Our priority right now is improving EDF's financial position, and I am confident that the benefits of the actions taken will begin to show in 2023," he said.

Another day, another billion-pound set of energy company profits. However, it is also another day where the full story is more complex than the headline might suggest.

Globally, EDF actually lost money last year. It had to deal with big problems with its French nuclear fleet. Here in the UK, the retail business supplying five million households also reported a loss.

However, the electricity-generating part of the company had a great year. It benefited from the high wholesale energy price at the same time as not having the costs associated with gas.

The company says this is a story of investment. It's ploughing billions into UK nuclear power. It will also be subject to a new tax on electricity generators introduced last month.

Whichever way you slice and dice the numbers, some campaigners say these profits - coming at the same time as people are struggling to pay their household bills - show the system is broken and that the government response is too little, too late.

Energy firms have seen soaring profits since oil and gas prices jumped following Russia's invasion of Ukraine.

On Thursday, British Gas owner Centrica posted a record profits haul of £3.3bn for 2022, although only £72m came from the part of its business that supplies energy to UK homes.

High energy prices have sparked calls for firms to pay more tax as many households are being hit by high gas and electricity bills.

Energy Security Secretary Grant Shapps said energy companies need "to do more", and that their "extraordinary profits" were a sharp contrast to the high bills consumers were facing.

Energy bills are due to rise again in April, when the Energy Price Guarantee will be hiked from £2,500 a year for the typical household to £3,000.

Energy firms are also under scrutiny after it was revealed earlier this month that debt agents for British Gas had broken into vulnerable people's homes to force-fit prepayment meters. It has resulted in many more similar incidents being brought to light.

In response Ofgem, the energy watchdog, has asked all suppliers to suspend forced prepayment meter installations until the end of March.