Utility Week

Utility Week 1st November 2013

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

Issue link: https://fhpublishing.uberflip.com/i/201852

Contents of this Issue


Page 17 of 31

Finance & Investment This week Government's VAT haul from energy sales leaps by almost 60 per cent since coalition took office Coalition cashing in on energy sales VAT The government's VAT haul from energy sales has leapt, according to HMRC figures, by almost 60 per cent since the coalition took office, fuelling calls for the tax on gas and power to be scrapped. VAT on domestic gas and electricity totalled £1.68 billion for the year 2011/12 – up from £1.07 bilOsborne: Treasury VAT windfall since 2010 lion in 2009/10. And recent price hikes unveiled by three big six energy suppliers could add another £158 million to the Treasury's VAT receipts, said price comparison website energyhelpline.com. Robert Halfon, the Conservative MP who won a freeze on petrol duty, has joined a growing call for an end to the 5 per cent VAT on domestic energy. But European Union law places a minimum VAT levy on domestic energy at 5 per cent and would prohibit such a move. "[VAT on energy] should be scrapped or reduced. It is a realistic way of cutting energy bills and a Conservative way as well," Halfon said. The anticipated VAT receipts for 2012/13 will add up to more than the total £1.2 billion cost of the four-year Warm Homes Discount scheme for the over-70s. Utility Week has calculated that the Treasury's VAT windfall since 2010 has been fuelled by cold weather as well as price hikes. The average energy price increases announced by the big six have added more than 30 per cent to bills from 2010 to date, based on the recent price increases announced by British Gas, SSE and Npower. And according to government figures, energy consumption has increased by about 20 per cent since 2010 – boosted by exceptionally low temperatures in 2011. TL Stock watch Gas Producers snub investors' warning Some gas producers have snubbed a group of big-hitting institutional investors who have written to them warning that tightening global carbon emission limits could strand fossil fuel investments and "gut" their share prices unless they take defensive action. Environmental consultancy Ceres organised 70 institutional investors, representing about £2 trillion in assets, to write to 45 major oil and gas producers warning them of the threat to fossil fuel investments from tightening global restrictions on carbon emissions. The investors wanted to know how aware the oil and gas producers were of the risks and what measures they were taking to address them – for example, making alternative investments. Ceres director Andrew Logan claimed responses had been "encouraging so far", but conceded a few companies had "dismissed the issue out of hand". The letter from the group – including investors from the US, the UK and Australia – highlights the possibility that national and global agreements to limit carbon emissions would force fossil fuel companies to leave large oil and coal deposits in the ground. "If national or global policies require steep cuts in the use of Iberdrola share price, October 22-25 Water Sector performance solid, says Moody's The UK water sector will maintain its solid performance until the end of the current five-year regulatory period in March 2015, according to Moody's. The sector has been on stable outlook since the ratings agency's first report in 2004 and it anticipates that returns during this period will be "broadly in line with regulatory assumptions". According to Moody's industry outlook report published last week, while the outlook is generally positive, highly leveraged companies are "most at risk from a challenging PR14". Energy EDF is 'overvalued' Equity analyst S&P Capital has deemed EDF shares as overvalued and dropped its recommendation from Hold to Sell despite the company sealing a strike price for its planned Hinkley Point C nuclear plant. S&P increased its target price to €22 but lowered its recommendation on the grounds that the stock was above the target, having soared 84 per cent in the past year. Iberdrola share price, three months 4.6 4.60 Iberdrola shares fell 2.5 per cent last week, dropping back from a two-year high, following a warning that regulatory changes in its native Spain were hurting its earnings and would lead to a dividend cut. Iberdrola owns Scottish Power, which became the latest big six supplier to announce a price hike last week. fossil fuels, they could gut the value of those companies that get stuck with unburnable resources they can't cash in," said Logan. 4.5 4.4 4.55 4.3 4.2 4.50 4.1 Date 18 | 1st - 7th November 2013 | UTILITY WEEK Oct 22 23 24 25 Date Sep Oct

Articles in this issue

Archives of this issue

view archives of Utility Week - Utility Week 1st November 2013