Liz Truss was accused of constructing a “screeching U-turn” because the Government unveiled plans to impose a windfall tax on renewable energy generators and nuclear power plants. Since Russia’s invasion of Ukraine, wholesale gas prices have shot as much as astronomical levels, triggering a significant energy crisis that’s currently gripping British households. Nevertheless, despite the actual fact the cost of electricity generation from renewable sources like solar and wind have remained largely the identical, a lot of these generators have been allowed to sell their power at market prices, which are set by natural gas. Because of this, these corporations have earned record profits previously yr, while households struggle to pay their bills.
Under the brand new plans, the profits from energy corporations like SSE and Scottish Power could take a significant hit because the Government plans to cap revenues.
While ministers say that the plan would help consumers and businesses pay a good price for his or her electricity, energy bosses have warned that such a scheme could delay investors.
Little is thought about this temporary cap on the quantity electricity generators could make, and is about to be introduced in the House of Commons on Wednesday as a part of the Energy Prices Bill.
Business and Energy Secretary Jacob Rees-Mogg said: “Businesses and consumers across the UK should pay a good price for energy. With prices spiralling consequently of Putin’s abhorrent invasion of Ukraine, the federal government is taking swift and decisive motion.
“We have now been working with low-carbon generators to seek out an answer that can ensure consumers aren’t paying significantly more for electricity generated from renewables and nuclear.”
Chancellor Kwasi Kwarteng said: “Our actions will mean that energy bills for the standard household can be half what they might have been this winter.
“We’re protecting people, holding down inflation and stopping Putin’s energy price hike from causing long-term harm to our economy by supporting businesses.”
Meanwhile, Labour accused the Government of backtracking on its previous vows, with Ed Miliband, the shadow climate and net zero secretary, saying: “The Government has finally accepted the principle of Labour’s call for a windfall tax on excess profits of electricity generators.
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“After months of telling the country they were utterly against the principle of a windfall tax, they’ve been dragged kicking and screaming to implement it.
“Yet again this shows Labour leading the agenda in British politics with one other screeching U-turn from a government in office but not in power. But the federal government’s delay in acting can have cost billions and the general public can pay the worth.”
During her campaign to develop into Prime Minister, Ms Truss ruled out a windfall tax on power generators, calling it “a Labour idea and all about bashing business and it sends the incorrect message to international investors and to the general public”.
Meanwhile, an industry source told the Guardian: “That is one other U-turn because it’s 100% a windfall tax from the folks that said they might never do one.”
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Dhara Vyas, Energy UK’s director of advocacy, said they welcomed the Bill as “much-needed support” for hundreds of thousands of households and businesses. Nevertheless, we must make certain that the proposed mechanism doesn’t risk the very investment the UK needs to make sure long-term, sustainable economic growth.
“We look ahead to continuing to work with Government to be sure that any latest mechanism is introduced in a way that encourages investment in low carbon generation, relatively than deterring it.”
Dan McGrail, chief executive of RenewableUK, warned that the move risks “skewing investment towards the fossil fuels which have caused this energy crisis. We’re concerned that a price cap will send the incorrect signal to investors in renewable energy within the UK”.
“A price cap acting as a 100% windfall tax on renewables’ revenue above a certain level, while excess oil and gas profits are taxed at 25 [ercent, risks skewing investment towards the fossil fuels which have caused this energy crisis.”