Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether his Department has made an assessment of the potential merits of introducing an investment allowance for the renewable energy sector within the Electricity Generator Levy.

As announced at Autumn Statement from January 2023 a 45% tax is being levied on the extraordinary returns being realised by certain electricity generators. At Spring Statement it was forecast to raise around £14 billion over the next 5 years which will help fund support for households and business with their energy bills as well as vital public services.

The Electricity Generator Levy (EGL) and the Electricity Profits Levy (EPL) are designed very differently. Unlike the EPL, the EGL is not a tax on a comprehensive measure of profit that is calculated after recognition of total revenues and costs. Instead, it is payable on the portion of revenues that exceed the long-run average for electricity prices. Rather than providing an investment allowance the government has taken into account the potential impact on investment in the design of the levy with the benchmark price, £75/MWh, being set at 1.5 times the pre-crisis level and indexed to CPI.