Dua Lipa and Callum Turner wedding divides Palermo: ‘I could understand if it was for the pope’
Dua Lipa and Callum Turner celebrate their wedding in Palermo, drawing mixed reactions from locals.
The Guardian World1 min read
Rachel Reeves to raise windfall tax on low-carbon electricity generators
TL;DR
Rachel Reeves plans to increase the windfall tax on low-carbon electricity generators to help reduce UK household energy bills. This move targets excess profits from older renewable and nuclear plants amid soaring electricity prices.
Key points
- Rachel Reeves plans to raise the windfall tax on low-carbon electricity generators
- The increase aims to limit UK household energy bills
- The levy targets excess profits from renewable and nuclear plants
- Executives in the industry will be contacted about the government's plans
- Proposals include weakening the link between gas prices and electricity costs
Rachel Reeves is poised to raise the government’s windfall tax on low-carbon electricity generators to help to limit UK household energy bills, the Guardian understands.
The chancellor is ready to hike the levy introduced in 2022 to target the excess profits made by the owners of older renewable energy and nuclear plants as electricity market prices soared after Russia’s full-scale invasion of Ukraine.
She could announce the plans to raise the so-called electricity generator levy as early as Tuesday, alongside a consultation on “radical” proposals to permanently weaken the link between soaring gas market prices and the cost of Britain’s electricity for the long term.
Executives across the industry have been told to expect contact from officials on Monday to set out the government’s determination that electricity costs should be protected from the surge in gas markets and be set more often by cheaper renewable sources.
Currently, the overall price is set by the most expensive source of power, which is usually gas power plants. This has led to a surge in electricity market prices across Europe, but particularly in countries such as the UK that rely on gas.
The plans to increase the generator levy – which applies to nuclear, biomass and renewable energy projects built before 2017 – will be used to raise Treasury funds to help shield consumer energy bills in the short-term while the government consults on long-term plans to reform the wholesale market.
The government is also expected to consult on plans to shift older, low-carbon projects subsidised by the government’s renewables obligation scheme on to the newer set-price contracts, which provide electricity at a guaranteed price.
The industry was put on alert after Reeves said on the sidelines of the IMF conference in Washington DC on Thursday that the government was considering “quite a big change” to weaken the link between gas and electricity costs that was “absolutely the right thing to do”.
Her comments caused shares in SSE to fall more than 6% on Friday to the lowest level since the war in Iran triggered a surge in global energy prices that pushed the company’s market value to an all-time high last week. Centrica, the owner of British , closed down 5% and Drax fell 3%.
Q&A
What is the purpose of raising the windfall tax on electricity generators?
The purpose is to limit UK household energy bills by targeting excess profits made by owners of renewable and nuclear plants.
When is Rachel Reeves expected to announce the increase in the windfall tax?
Rachel Reeves could announce the plans as early as Tuesday.
How does the current electricity pricing system affect UK consumers?
The current system sets electricity prices based on the most expensive power source, usually gas, leading to higher costs for consumers.
What are the proposed changes to the electricity pricing system?
The proposals aim to weaken the link between gas market prices and electricity costs, allowing prices to be set more often by cheaper renewable sources.
