Shell Energy Retail has blamed unsustainable pricing by competitors, increased regulation and volatile wholesale costs for soaring losses during 2020.
The supplier reported a more than three-fold increase is operating losses from £26.7 million in 2019 to £83.6 million over the 12 months to the end of December.
Pre-tax losses more than quadrupled from £31.5 million to £137.8 million after the company recorded impairments of £52.4 million. Its revenues rose by almost 3 per cent to £856 million.
The supplier finished the year with 940,000 residential customers – up from 745,000 a year before – having absorbed 200,000 customers acquired from Green Star Energy.
Oil giant Shell bought the retailer, which was then known as First Utility, in December 2017 and rebranded the company under its own name in March 2019 after announcing plans to become the “world’s largest power company” by the early 2030s.
“The UK market was Shell’s first entry into residential energy sales and has been the test bed for developing the Shell Energy sub-brand on a global basis,” said Ed Kamm, chief executive of Shell Energy Retail.
“There is no doubt that the UK retail energy market remains the toughest and looks to continue to be challenging in the near term,” he added.
“Unsustainable loss-making pricing, combined with increased regulation and a volatile wholesale market has put pressure on all suppliers.
“This, combined with an investment in customer growth, higher customer acquisition costs and a rise in bad debt as a result of the coronavirus pandemic, resulted in a loss during 2020.”
He continued: “Despite this, we remain optimistic and enthused for the long-term opportunities. We continue to invest for the long term to support households through the energy transition to help meet the UK’s goal of reaching net zero emissions.
“We see exciting opportunities in this space which will provide a foundation for success in the decades to come.”
Last month, Shell Energy Retail was appointed by Ofgem as the Supplier of Last Resort for the 255,000 customers of failed supplier Green.
Utility Week has launched the Energy Reset campaign, in a bid to ensure the current crisis results in real reform of the energy retail market.