The chancellor is considering a levy on the extra profits generators make above a certain price per megawatt hour, which has yet to be decided. Hunt also plans to boost the existing contingency tax for North Sea oil and gas operators, increasing the tax from 25% to 35% and extending it by two years to 2028. The two windfall taxes are expected to raise £45 billion over six years, depending on energy price movements, according to the Financial Times. The North Sea tax was expected to raise around £28 billion over four years. The move to cap profits from power producers represents a departure from former prime minister Liz Truss’ plan to limit the revenue of renewable and nuclear power producers from next year under the EU’s “revenue cap” . Officials have spent more than six months looking at ways to tax power producers, which have enjoyed big profits from rising energy prices — tied to rising wholesale gas costs — while their costs have remained largely flat. The government has drawn up plans to move companies on a voluntary basis to contracts for difference, which limit their income but guarantee them a long-term income. However, the industry is divided on which program they prefer. Industry sources said producers have increasingly indicated that a one-time tax would be preferable to the uncertainty of options linked to volatile energy prices. “The suggestion was that the choices are just too complicated and that a simple tax would give investors more certainty about the future,” said one energy executive. There are fears that a tax on renewable energy companies could deter investors from backing large-scale green energy projects. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Energy company SSE said an unexpected tax could damage Britain’s progress in creating domestic sources of electricity. Hunt is expected to unveil the enhanced windfall tax in his autumn statement on Thursday. It is also likely to announce changes to the energy price guarantee, which caps a typical household bill at £2,500. In one of his first acts as chancellor, Hunt reduced the Trust’s two-year policy of reducing energy bills to six months. It is expected to keep protections in place for millions of vulnerable low-income households and pensioners.
