Skip to content

Rishi Sunak plans raid on electricity and wind farm profits within a month

May 27, 2022

By Paul Homewood

But here is the good news:

 

From The Times:

 

 

 image

The chancellor is preparing to impose a windfall tax on electricity firms within weeks despite provoking a furious backlash from business yesterday by launching a £5 billion raid on North Sea oil and gas producers.
Rishi Sunak yesterday abandoned months of opposition to a windfall tax by announcing a new 25 per cent levy on the “extraordinary profits” that oil and gas companies are making after prices surged, partly driven by Russia’s invasion of Ukraine.
Defending the U-turn to fund relief for consumers facing record energy bills, Sunak declared: “We all make mistakes and being able to change course is not a weakness, it is a strength.”
The chancellor threatened to extend the levy to power-plant owners, saying that “certain parts of the electricity-generation sector are also making extraordinary profits” and that he was “urgently evaluating” the scale of these profits, and the steps to take, following moves by other European countries to tax power companies.
The Times understands that Sunak intends to announce plans to tax electricity generators within the next month. “It’s called the energy profits levy for a reason,” a government source said. “It’s a broad tax, we want to move sooner rather than later.” The tax on electricity generators would raise in the region of “the low digit billions”.

The Times, 27 May 2022

38 Comments
  1. steve Porter permalink
    May 27, 2022 6:10 pm

    Some generators are deliberately delaying moving over to their option of CfD because they will lose out on the current bumper profits should they do so. This must also be addressed as part of the re-alignment.

  2. Ben Vorlich permalink
    May 27, 2022 6:11 pm

    So is Germany, and following Denmark’s lead.
    Germany is looking to introduce the so-called “negative bidding” for some of its new offshore wind auctions, according to WindEurope, which warned about the effects this approach could have on consumers and the supply chain.

    https://www.offshorewind.biz/2022/05/26/germany-pondering-negative-bidding-in-offshore-wind-windeurope-warns-about-consequences/

    • It doesn't add up... permalink
      May 27, 2022 7:18 pm

      Auctioning of seabed has long been standard in oil and gas. How much is bid depends on prospectively of a licence area, likely development cost, and guesses about future revenues and taxes. High bids assume that revenues will be high and that at least the bid and development cost can be offset against taxes.

      In fact the Crown Estate has been doing it for windfarms, and the Scottish section was roundly criticised for following an SNP diktat to limit the maximum auction price.

      https://www.thecrownestate.co.uk/en-gb/what-we-do/on-the-seabed/offshore-wind-leasing-round-4/

  3. Harry Passfield permalink
    May 27, 2022 7:09 pm

    I do hope our old ‘friend’ Dale Vince is one of those asked to ‘donate’ to the pool.

    • It doesn't add up... permalink
      May 27, 2022 7:19 pm

      Supposedly he resigned from Ecotricity to go into politics.

  4. Gamecock permalink
    May 27, 2022 7:24 pm

    Note that “extraordinary profits” attracts capital. Punative taxes discourages it. So, an upturn in the energy generation business must be crushed before people invest.

    If his philosophy was “We don’t want energy!” his behavior wouldn’t be any different.

    How did this dude get to be CoEx?

    Sunak says “we can get inflation under control.”

    By handing out 21B pounds cash to help “those who are struggling.”

    Adding a couple more percent to your inflation rate.

  5. Curious George permalink
    May 27, 2022 7:33 pm

    If it moves, tax it.
    If it still moves, regulate it.
    If it stops moving, subsidize it.

    Ronald Reagan on government’s role in economy.

    • Ian Johnson permalink
      May 28, 2022 12:11 am

      The last one seems true for windmills.

  6. bobn permalink
    May 27, 2022 8:09 pm

    Yes. Its insane to tax energy production (and thus reduce it) when our ‘crisis’ is due to a lack of energy.
    What Slimey Sunak needs to do is end subsidies. (Not keep giving subsidies then tax the receivers of subsidies!?!)
    Scrap the fake carbon credits scheme and Renewable obligation schemes tonight. Scrap the nonsensical climate levies. This gains the Govt funds and incentivises investment and reduces costs and inflation. So simple but our simpleton politicians cant even count the fingers on one hand.

    • Chaswarnertoo permalink
      May 28, 2022 7:23 am

      End subsidies. Cut taxes. A Conservative idea. No chance.

    • Penda100 permalink
      May 28, 2022 9:20 am

      So, have I got this right? The Government forces consumers to pay subsidies to renewable generators who then make excess (obscene) profits, that the Government then taxes in order to give a subsidy to the consumers so that the consumers can continue to pay the subsidies to the renewable generators?

      • May 28, 2022 10:12 am

        Sort of right, but as from now there will be profits caps as well as price caps.

      • Ray Sanders permalink
        May 28, 2022 10:12 am

        Superbly put! I might copy and paste that comment into a few other forums…like the Guardian….if it’s okay with you.

      • Penda100 permalink
        May 28, 2022 10:24 am

        Ray you’re welcome.

    • Sean permalink
      May 28, 2022 10:13 pm

      “So simple but our simpleton politicians cant even count the fingers on one hand.”

      It’s hard to count the fingers on your hand when you have them shoved deep in other people’s pockets.

  7. GeoffB permalink
    May 27, 2022 8:38 pm

    The balancing mechanism that sets electricity prices is based on “Games Theory” it is biased to make the most profit for the suppliers at the expense of the consumers, it also uses marginal costs to set the wholesale price which a smart meter uses as a basis for demand side reduction pricing. The whole system needs to be scrapped, how the idiots at OFGEM have allowed customers to be fleeced by the generators is criminal.
    We can all see that the Net Zero, mandated by the climate change act is the real cause of the high prices of gas and electricity that occurred in Autumn 2021, I also believe the adoption of similar policies by USA and EU emboldened Putin to start the invasion of Ukraine. So just repeal the climate change act, cut all the subsidies (although contractually that might prove difficult) and accept that we cannot eliminate fossil fuels by 2050 and really there is no need, CO2 is a benign trace gas that provides all food on Earth in photosynthesis, it is not a pollutant.

    • May 27, 2022 10:54 pm

      Laudable objectives, but first the crackpot ideas in vogue at present have to be comprehensively dragged through the mire to dissuade anyone from reviving them in future.

      A painful but inevitable process it would seem.

      • Curious George permalink
        May 28, 2022 2:07 am

        Unfortunately, voters have a memory span measured in weeks.

  8. Ed P permalink
    May 27, 2022 8:52 pm

    The sensible policies suggested here will never be adopted by government – they have hundreds of ‘advisors’, all of whom know better (& have cushy jobs to protect).
    Sack those 90,000 ‘bolshy servants’, then another batch, until sense prevails. And simplify tax, so another load of useless pen-pushers in the IR can go too!

    • dave permalink
      May 27, 2022 10:06 pm

      There is nothing new about insane British Goverment (in)activity. I have just finished reading ‘Memoirs of an Unconventional Soldier’ by General J.F.C. Fuller. He gives, verbatim, the SEVEN pompous lttle wrtten communications in the War Office in 1926 that were involved in obtaining a new pair of mapping compass-dividers, worth eighteen pence, for – wait for it – the Chief of the Imperial General Staff of the Armies of the British Empire. No wonder that the British Empire no longer exists!

      • Gamecock permalink
        May 27, 2022 10:18 pm

        I know that name. I have read that Heinz Guderian was his biggest fan.

      • dave permalink
        May 28, 2022 9:48 am

        “Heinz Guderian was his biggest fan.”

        The winners of a war go to sleep. The losers look for ways to win the next. Fuller was “a prophet scorned in his own country” while other armies were digesting his revolutionary [sic] idea that one should devise new tactics for new weapons. He never claimed to be more than ‘the fly on the chariot wheel’ peering through the dust as modern society careered along.

        One of his books on future mechanized wars sold less than 500 copies in England but 30,000 copies were issued in the Bolshevik Army. He was well aware of the irony.

        His contempt for Democracy as opposed to “strong men” has not worn particularly well; though many of his criticisms still sting:

        “…mentally the masses are seldom less than a generation out of date
        and sometimes a thousand years out of date.”

      • Adam Gallon permalink
        May 29, 2022 7:30 am

        And the Bolsheviks went on to shoot their greatest proponent of it, Mikhail Tukhachevsky.

  9. May 27, 2022 11:01 pm

    Yet Sunak and Boris can’t comprehend that the course they need to change is not windfall taxes, but Net Zero itself. It is the most erroneous, misguided, heinous and ruinous policy ever imagined, apart from perhaps the covid response policy.

    • Cheshire Red permalink
      May 28, 2022 9:55 am

      ilma630

      This goes to the heart of the matter.

      Government payments are directed at symptoms, not the cause of our cost of living crisis. Unless the cause is addressed the same problems will recur later this year, next year and so on.

    • dennisambler permalink
      May 28, 2022 11:31 am

      But the UK is leading the world in fighting climate change…

    • Gerry, England permalink
      May 29, 2022 10:25 am

      The government has yet to comprehend that there is a cost of living crisis – not least because it doesn’t affect them – that is mostly of their own making and that their policies are going to make worse. As a small example, the nation’s fish and chip shops are seeing costs soar and so what policy to they need to help them? Yes, the imposition of an increased import tax on supplies of white fish from Russia. The only thing that might finally hit home given that all they care about is being in power – although they often seem very keen to give it away to others such as the EU and now the Chinese run WHO in supporting their plan to take control of countries in a ‘health emergency’ – is surveys that show the Tory scum will be hammered to oblivion in the next election. Peter Hitchens has long argued that it is a necessary thing to allow the country to progress.

  10. Matt Dalby permalink
    May 27, 2022 11:13 pm

    If energy companies were still owned by the state, then prices could easily be controlled even if it meant the state made a temporary loss which had to be covered from general taxation.
    Also any licences for oil and gas fields should contain a clause that says a large percentage of the output has to sold domestically at a capped price thus shielding us from volatility on the international market.
    This might strike some people as far too marxist i.e. the government interfering in the market. However they already massively interfere with subsidies for renewables, forcing supply companies to buy renewable power instead of cheaper options etc. If they wish to interfere they should do it for the benefit of consumers not green ideology, otherwise they should just leave the market well alone to develop the cheapest source of energy e.g. fracked gas.

    • It doesn't add up... permalink
      May 28, 2022 1:39 am

      I can imagine little that could be worse that allowing the green nutters in government to run the entire energy industry. Blackouts, shortages, corruption, wholesale destruction of anything that worked. Remember, they want us to be cold poor and hungry and they want to stamp their carbon footprint ideas on every forehead.

    • Gerry, England permalink
      May 29, 2022 10:27 am

      The government should not be allowed to run anything given their record of failure over the decades.

  11. EppingBlogger permalink
    May 28, 2022 12:32 am

    Would it not be more relevant to ensure the wind farm and solar farm operators made full fumnded provision for the clear up costs. Nuclear has to do sop why noy the others.

    When the existing installations are decommissiomned there will be a lot of unpleasant material to dispose. The concrete foundations akoine will be massive and the electrical conduits from them all will be enormous.

    Battery plants are unlikely to last as long as hoped and the disposal costs will be large – or are they planning to dump them on the villages from which the young children came from who mined the stuff uin the first place?!

  12. ScepticMeg permalink
    May 28, 2022 7:31 am

    Not the correct place to post this but I see from the Telegraph that the National Grid has been put on notice for using more coal this winter – the comments section is guessing as to where this will be imported from, almost certain not to be home grown

    • dave permalink
      May 28, 2022 10:36 am

      Yes, but , once imported, where will it be used? Our wonderful green blob goverment has gleefully destroyed almost all of the generating stations that can use coal taking care that they cannot be reinstated.

  13. Jack Hennessey permalink
    May 28, 2022 11:13 am

    Scrapping the green levy and fracking would be far more effective.

    • dennisambler permalink
      May 28, 2022 11:41 am

      Boris posturing on the world stage with his new best friend Bill, means this is unlikely to happen:

      https://www.lbc.co.uk/news/pm-says-uk-must-lead-climate-action-because-it-knitted-the-deadly-tea-cosy-of-cl/
      “Speaking at the Global Investment Summit at the Science Museum, Boris Johnson said the UK had a responsibility to lead the world in decarbonising because as the first nation to industrialise, Britain sent “plumes of smoke from the midlands, we were the first to knit the deadly tea cosy of CO2 that is now driving climate change.

      The Prime Minister said the Government was making “big bets” on electric vehicles and gigafactories for battery production. Setting out the UK’s ambitions for hydrogen, Mr Johnson said it was “part of the solution”.

      On the day the Government publishes its net zero strategy for cutting emissions, Mr Johnson also announced a £400 million partnership with Microsoft co-founder Bill Gates to boost green investment to tackle the climate crisis.

      Addressing business leaders, he said the Government had committed £200 million with Mr Gates agreeing to match the figure.”

  14. Stonyground permalink
    May 28, 2022 6:30 pm

    The wind turbines in our area have spent an awful lot of time stationary lately because there has been no wind at all. Today it is quite breezy but there is a nearby array of eight turbines and four of them are stationary at the moment.

Comments are closed.

%d bloggers like this: