Hunt defends new electricity generator levy in Downing Street showdown
Chancellor Jeremy Hunt defended the introduction of a new tax on legacy electricity generators at a Downing Street roundtable this week.
Hunt told North Sea operators that the Electricity Generator Levy was justified with profits across the industry being well above levels prior to Russia’s invasion of Ukraine.
He believed it was right for the sector to contribute towards the generous energy bill support provided to households and businesses during these unprecedented times.
The Electricity Generator Levy is a temporary 45 per cent tax on extraordinary returns made by older UK electricity generators from 1 January 2023.
The tax will not be payable on newer renewable generation supported through the Government’s Contracts for Difference scheme.
Leading renewable operators SSE and Scottish Power have both previously criticised the new levy, warning it could deter investment.
It also does not come with investment relief, in comparison to the Energy Profits Levy for oil and gas operators.
The Energy Profits Levy comes with 91p in the pound investment relief – however this has not been enough to encourage new projects with the hiked windfall tax.
Harbour Energy has fallen out the FTSE 100 amid less encouraging investment data while Total Energies has slashed £100m from its UK development plans.