Tag: Electricity pricing

Chancellor raises Windfall Tax levies on electricity generators

The Government has announced it will increase the electricity generator levy (EGL) from 45% to 55%, targeting the excess profits of some nuclear, biomass and renewable generators.

To reduce the exposure to this Windfall Tax, ministers are proposing that these “legacy” generators, which supply around a third of Britain’s power, could move voluntarily onto lower fixed-price contracts to help insulate consumers from volatile global gas prices and bring down bills.

Recent research for the End Fuel Poverty Coalition, found that almost half the public (47%) believe that windfall taxes should actually be extended to more companies within the energy industry. 21% of the public opposed such a move and 32% had no opinion.

A spokesperson for the End Fuel Poverty Coalition, commented:

“For too long, households and businesses have been paying electricity bills linked to and inflated by a gas market they have no control over. This is a structural failure in how our energy system is priced and it has cost households dearly. Raising the levy on generators that pocket windfall profits when bills soar is the right thing to do.

“The carrot and stick approach where energy firms are incentivised to lower prices by moving to new contracts, or face higher taxes, is a sensible one. If these new contracts are properly designed and genuinely deliver for consumers, it could lower prices overall. The critical test is whether households, particularly those least able to pay, actually see the benefit on their bills and by when.

“The Government is right to act, but these measures must be the beginning and not the end of reform. Millions of households are still struggling with bills that are significantly higher than before the start of the energy crisis in 2021. Any revenue raised from the levy increase must be used to support those most exposed to fuel poverty and Ministers must not lose sight of the need for a wider overhaul of how electricity is priced in this country.”

Grid reform is welcome, but must not become a blank cheque

Ofgem and the National Energy System Operator have announced the biggest shake-up of Britain’s grid connections process to date, prioritising “shovel-ready” renewable projects and clearing out speculative or stalled applications.

But with network firms and energy generators having made billions during the energy crisis, much of it flowing to offshore ‘vampire funds’, campaigners are demanding a just transition that puts people before profits, a focus on community energy projects and delivering fairer bills for households.

A spokesperson for the End Fuel Poverty Coalition, commented:
“Reforming the grid connection system a necessary move that will help unlock cheaper, cleaner, homegrown energy and bring us closer to an energy system that ends fuel poverty.

“But faster grid access must be matched by real accountability for how network firms and energy generators spend and profit. These companies have made billions during the energy crisis — with profits flowing to offshore investors and so-called ‘vampire funds’.

“This reform must not become an excuse for blank cheque infrastructure spending that inflates standing charges while delivering poor value for households.

“And it must be a fair process, so it’s not just a case of those projects with a healthy lobbying budget get preferential treatment. Community energy projects, which deliver cheaper power for customers and have local control and accountability built in, must not be excluded or pushed to the bottom of the queue.

“To truly fix Britain’s broken energy system, we need grid reform, fair pricing, investment in energy efficiency and a social tariff to ensure the transition benefits everyone — not just big investors.”