The UK plans to announce in the coming days whether it will extend a windfall tax to electricity generators — a difficult task as the government tries to help consumers struggling with inflation while also supporting renewable energy.
Officials have been weighing the levy after identifying excessive profits in the power sector. Earlier this year, the government imposed a 25% tax on the profits of North Sea oil and gas producers.
The decision as to whether to include power generators will be announced next week, Max Blain, Prime Minister Boris Johnson’s spokesman, told reporters on Friday.
The move comes as Johnson plans to step down following a revolt by members of his Conservative party. The premier isn’t supposed to make new policy decisions while he’s standing in a caretaker role until October. Blain wasn’t specific as to whether the windfall tax had previously been agreed.
“The position is to not unpick previously agreed fiscal decisions,” he said.
The government is seeking to help millions of Britons deal with a cost-of-living crisis, driven by inflation. At the same, it’s pursuing a net-zero climate policy rooted in renewable energy production. However, because expensive natural gas sets market electricity prices, renewable generators have been able to sell power at much higher prices than their fixed costs.
Earlier this week, analysts were expecting the levy on generators to be delayed or scrapped amid the shake-up in Johnson’s government. Officials have been working on proposals to decouple gas from power prices, with possible options expected later this summer.
Drax Group Plc shares dropped 1.7%, while SSE Plc slid 0.7%. Centrica Plc declined 1.2% on the London Stock Exchange as of 3:17 p.m. local time.
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