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
• 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.

Please contact our Clean Energy team for further advice.