Outgoing Prime Minister Boris Johnson has abandoned plans discussed to introduce an extraordinary tax on electricity generators.
Former Chancellor Rishi Sunak had raised the possibility of hitting electricity companies with a tax similar to the tax on energy profits for North Sea oil and gas operators.
A decision on whether to go ahead with the tax was expected this week. Johnson’s spokesman, Max Blain, was asked Monday whether the energy benefits tax would be extended to electricity generators and said, “We would not seek to make new policies or major tax decisions. So there are no plans. to do it.
“We will continue to assess the scale of benefits and consider the appropriate steps, but there are no plans to introduce or expand it to this group.”
The move caused the shares of listed power companies to skyrocket. Shares of Drax, the operator of the eponymous North Yorkshire power plant, rose 6%, while SSE rose 3% and British Gas owner Centrica rose 3%. All three suffered punitive sales when in May it was realized that Sunak was considering extending the tax to generators.
Adam Berman, Deputy Director of Energy UK, said: “An extraordinary tax on generators would deter, delay and increase the cost of the investment we need to achieve our national energy security and climate change goals.”
SSE chief executive Alistair Phillips-Davies had said an extraordinary tax could make it difficult to work on building domestic energy supplies.
In May, Sunak announced the energy benefits tax as part of a £ 15bn package of measures to tackle the cost of living crisis. He hoped to raise £ 5bn with the tax. A vote on the rate is expected to take place on Monday evening in parliament.
Prior to his presentation, Business Secretary Kwasi Kwarteng wrote to energy companies in April to state the “need to accelerate and maximize domestic oil and gas production as we make the transition to energy. net of own production “, as the Ukrainian war focused on the supply of fossil fuels. .
Oil companies such as BP and Shell have warned that the tax could affect UK investment since Sunak’s announcement. The fee includes tax credits for domestic investment.
The North Sea Transitional Authority (NTSA), an independent agency overseen by the business department, has asked UK oil and gas operators to outline their investment plans.
In a letter to companies, seen by the Guardian, NSTA Director of Operations Scott Robertson said: “The NTSA would like to understand what plans you have to meet the Secretary of State’s challenge and what opportunities there are. in your North Sea. portfolio to accelerate investment and production in both the short and medium term “.
Robertson said he was “aware that you may be re-evaluating your business plans and joint venture operating programs and budgets for 2023 in light of the recently announced energy benefits tax.”
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The authority has given companies until the end of the month to respond, identifying projects that could be accelerated now or in the next two years or “they may no longer be able to move forward in view of the rate of energy benefits.” He then plans to meet with companies in August.
Separately Monday, National Grid shareholders approved a £ 6.5 million payday for its chief executive, John Pettigrew.
Payment activists had criticized the package, which had risen £ 1.1 million a year earlier, arguing that consumers had little choice about where to receive their energy, meaning the payment package was not justified. Consumers are also struggling with a huge increase in their energy bills.
The Pirc shareholder advisory group urged investors to vote against the wage package. However, only 5.5% of the votes were cast against the remuneration report at the company’s general meeting in London.