UK gas, electricity industry may make 170 billion pounds excess profits -Bloomberg

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FILE PHOTO: Gas burns from a ring on a domestic cooker

LONDON (Reuters) -Britain's gas producers and electricity generators could make excess profits of up to 170 billion pounds ($198 billion) over the next two years, Bloomberg News reported on Tuesday, citing unpublished analysis that the finance ministry disputed.

Europe is facing massive increases in energy bills driven by rocketing gas prices as war in Ukraine and European sanctions on Russia heighten concerns for the security of gas supplies.

That has put profits in the energy sector in focus as the British government comes under intense pressure to increase the financial support it has pledged to help households through the sharp rise.

Bloomberg cited unpublished Treasury analysis showing the scale of excess profits, defined as the difference between predicted profits and what the firms could have been expected to make based on price projections from before Russia's invasion of Ukraine.

The analysis showed around 40% of the excess profits would be attributable to power producers.

The Treasury said: "We don't recognise this analysis."

"The government has been clear that it wants to see the oil and gas sector reinvest its profits to support the economy, jobs, and the UK’s energy security," a government spokesperson said.

"We also expect our newly introduced Energy Profits Levy to raise an extra 5 billion pounds in its first year to help pay for our 37 billion pound support package for households."

The Energy Profits Levy - a 25% windfall tax on oil and gas producers in the North Sea - was announced in May.

The government had said at the time that it would consider a similar tax on electricity generators, but outgoing Prime Minister Boris Johnson has left any decision on that to his successor, due to be named next week.

($1 = 0.8578 pound)

(Reporting by William James and Paul Sandle; editing by Jonathan Oatis and Bernadette Baum)