Autumn Statement 2022 – Electricity Generator Levy – Update

The Autumn Statement published on 17 November 2022 included an Electricity Generator Levy. The Statement was accompanied by technical guidance and followed in December by a supplementary technical note  and draft legislation.

The key points from an electricity generator’s perspective are as follows:

• 45% levy on “exceptional generation receipts”, defined as electricity sold at >£75/MWh (this figure is indexed annually in line with CPI)
• applies to generation from nuclear, renewable and biomass sources, but not gas, pumped hydro, battery, or other storage technologies;
  – where storage and generation assets are co-located, generators will need to calculate the metered output that relates to the generation, and separately determine the receipts that are attributable to that generation (see our previous article on P375 ‘Metering behind the Boundary Point’: electricity asset co-location)
• the measure of generation receipts:
  – disregards revenues from the sale of ROCs and REGOs, Ofgem-regulated FiT generation and export tariff payments, ancillary services payments, capacity market payments, and revenues from the sale of electricity pursuant to a Contract for Difference (CfD) with LCCC;
  – takes account of accepted balancing market offers, the net impact of imbalance settlement, and gains/losses on hedging
• applies from 1 January 2023 until 31 March 2028. Full text of the legislation is expected in the spring Finance Bill 2023 (due 23 March 2023)
• limited to generators or groups of generators whose output exceeds 50GWh per annum
• applies at an aggregate level across all in-scope generation of a corporate group
• applies to receipts above an annual group allowance of £10m
• administered in the same way as Corporation Tax (amounts to be returned within the company’s Corporation Tax Return); an
• designed to cover electricity generated through joint venture structures by attributing exceptional generation receipts to members of a JV proportionately in line with their shareholding of that JV or entitlement to receive income from that JV.

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Please contact our Clean Energy team for further advice.

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The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.