One assumes the UK government, despite its reported rhetoric, would loathe to go down that route since it would represent another U-turn. The European Union, note, is streets ahead with its revenue cap, which is really a form of windfall tax. As long as the gas prices remain high, delay only benefits the generators. It ain’t straightforward.īut the underlying dynamic is that the government needs to get something in place. Another is that, logically, new contracts would have to be designed on a fuel-by-fuel, or even project-by-project, basis. ![]() Another is that “renewable obligations certificates” – the incentive mechanism – roll off over varying periods. One complication is that generators sell their output a year or more in advance, so their windfall profits have yet to arrive the former chancellor Rishi Sunak (remember him?) encountered the same issue when contemplating an extension to his North Sea windfall tax and gave up. Meanwhile, the FT reports that the government is threatening the relevant energy firms with a cap on their revenues unless they agree a voluntary deal. “Discussions are taking place, but not the hard yards of an actual negotiation,” says another. “Talks are stuck,” says one renewables industry source. The mood music was excellent.Īnd now? The tone is very different. The chief executive of Centrica, owner of a 20% stake in the UK’s nuclear fleet, declared he wanted his company to be the first to sign a new-style contract. A new energy supply taskforce was established within the business department to hammer down the details and seemed to get off to a flyer. New electricity supply contracts, it was argued, would make the guarantee more affordable for the public purse. ![]() ![]() The ambition became a firm policy on 8 September, when Liz Truss announced the government’s two-year “energy price guarantee” for households.
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