Liz Truss’ government is moving forward with plans to cap profits for renewable power generators, new reports show, as soaring energy prices continue to be high on the agenda Politics. It comes as the government seeks to limit the maximum price of electricity from certain renewable installations and nuclear generators from the next few days, the BBC reported on Saturday.
The broadcaster said production costs for renewable energy companies and nuclear power companies had not increased, allowing for substantial profits.
This could have implications for the profits generated by companies such as EDF Energy, SSE and Scottish Power.
Wholesale energy prices have soared since Vladimir Putin launched his invasion of Ukraine in February.
But the UK has resisted imposing measures that would amount to a windfall tax even as the EU pursues such measures.
The bloc announced last month that energy ministers had agreed to impose windfall taxes on the profits of energy companies.
A “solidarity contribution” must be paid by fossil fuel producers who have seen their profits increase due to rising energy prices.
The EU then said in a statement that revenues for renewable energy producers and nuclear energy companies would be capped.
The bloc said this was due to “unexpected financial gains” accrued over the past few months due to the link between gas and coal prices.
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People involved in the talks later told the publication that the government had told power producers in a private meeting that it intended to introduce a cap.
One person said at least a “high percentage” of revenue generated above the government cap would be received by the Treasury.
In May, former Chancellor Rishi Sunak imposed a one-off 25% tax on oil and gas companies, known as the “energy profits levy”.
Mr Sunak considered a windfall tax on renewable and nuclear power generators, but the idea was eventually scrapped.
Ms Truss, in one of her very first acts as Prime Minister, announced a two-year energy cap freeze at £2,500 for the average household, in a bid to relieve pressure from rising invoices.