Utility Week

The Month in Review Brearley Pinchbeck 6 | DECEMBER 2022 | UTILITY WEEK "In my experience, loss of customer support can lead to irrational, poor decisions being made on the hoof." Jonson Cox, former chair of Ofwat, speaking at the Utility Week Forum, see p12. The Month in Review J eremy Hunt has unveiled a windfall pro ts tax on low-carbon generators, extended universal support for house- hold energy bills and announced £6 billion of new investment in energy e ciency in the next Parliament. In his Autumn Statement, the recently appointed chancellor announced a series of moves to address the ongoing energy crisis. As well as increasing the existing Energy Pro ts Levy on gas and oil from 25% to 35%, Hunt announced a 45% windfall tax on electricity sold above £75/MWh, which the Treasury said is about one-and-a-half times the average price over the past decade. Combined with corporation tax, this will bring the cumulative rate on low-carbon generators' earnings over £75/MWh to 70%. The Electricity Generator Levy will be limited to generators whose in-scope output exceeds 100GWh across a period and will only apply to extraordinary returns exceed- ing £10 million. It will not apply to electricity generated under Contracts for Di" erence. It will take e" ect from 1 January and is due to run until 2027/28. Hunt said the increased windfall taxes should raise more than £14 billion between 2023 and 2028 and will help pay for the £55 billion of support being provided for house- hold and business energy bills this winter. The chancellor also revealed that the Energy Price Guarantee for all households, which was previously due to end in April, will be extended by 12 months, although the cap it provides on typical energy bills will increase from £2,500 to £3,000. He said Hunt makes tax grab on low-carbon generation Market Stabilisation Charge triggered for the fi rst time Ofgem has con rmed that the Market Stabilisation Charge (MSC) has been triggered for the rst time since it was introduced in mid-April. The MSC, which is paid by suppliers gaining new cus- tomers to the suppliers that are losing them, is intended to ensure that prudently hedged companies are not penalised by being undercut by rivals if wholesale prices fall sharply. It amounts to 85% of the hedging losses of a nominal supplier and is triggered if prices fall more than 10% lower than the wholesale cost element used to set Ofgem's price cap. Ofgem said a charge of £3.56/MWh for gas was in place from 16 to 22 November aš er the trigger condition was met. The regulator also said it would publish a statutory consultation on 25 November, as this issue went to press, on options to extend the MSC by one year to 31 March 2024. It said it would also consult on a similar extension to the ban on acquisition-only tari" s that was introduced along- side the MSC. 77% of a study of the public by YouGov said they would support an onshore wind farm in their locality. top-up help will be made available for more vulnerable households. The Treasury said the government will develop a new approach to consumer protec- tion, which will apply beyond April 2024, and will consider options such as social tari" s as part of wider retail market reforms. Hunt additionally announced a further £6 billion for energy e ciency between 2025 and 2028 and set a new target of reducing nal energy consumption from buildings and industry by 15% by 2030 when compared to 2021 levels. An Energy E ciency Taskforce will be established to achieve the target. He also gave the long-awaited go-ahead for EDF's Sizewell C nuclear project and said the contracts for the initial investment will be signed within the "coming weeks". Meanwhile, in its latest economic and scal outlook, the O ce for Budget Respon- sibility has revealed that the government's bailout of energy suppler Bulb is now expected to cost taxpayers £6.5 billion, of which £4.6 billion was incorporated into the chancellor's Autumn Statement. In October, the government approved a deal for Octopus Energy to take over Bulb and its 1.5 million customers. However, the process has been delayed aš er a High Court declined to con rm a transfer date due to concerns raised by rival suppliers that the deal may be unlawful. David Blackman, political correspondent For a full analysis of the Autumn Statement, see p28 Chancellor Jeremy Hunt of a study of the public by YouGov said they would support an onshore wind farm in their locality.

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