Community Windpower has threatened legal action against the government’s planned windfall tax on electricity generators.
The Government’s new Electricity Generator Levy (EGL), due to come into effect on 1 January, is a 45% charge on so-called ‘exceptional receipts’ generated from the production of wholesale electricity. Exceptional receipts are defined as wholesale electricity sold at an average price in excess of £75/MWh over an accounting period.
Community Windpower said it has serious concerns about how this figure has been arrived at. It says it is below the cost of production, and does not take into account record inflation and a three-fold increase in financing costs.
The company says when combined with the corporation tax rate, the Levy will take Community Windpower’s marginal tax rate to 70%.
The Cheshire-based company, which has eight operating wind farms, two consented and three under development, said it has instructed London law firm Mishcon de Reya to ensure that the Levy “is urgently amended to be fair and to better achieve the government’s own objectives”. It warns that the effect of the way the EGL has been designed will be to make investment in the sector “completely unviable”.
It says, “In order to preserve the progress made by UK renewable businesses in recent years, Community Windpower is calling on the government to take its environmental responsibilities seriously. Taxing green renewable generators while letting oil and gas generators a free ride is completely at odds with the Government’s own legally-binding environmental ambitions.
“Community Windpower has asked the Government to respond with urgency on our detailed points of concern. Legal action will reluctantly be taken early in the New Year if the EGL is not substantially redesigned.”