Boris Johnson has no plans to introduce a windfall tax on electricity company profits before stepping down as Prime Minister, his spokesman has said.
The government said in May that oil and gas companies would be taxed an extra 25% for the next 12 months to help households with mounting bills.
However, the Prime Minister’s spokesman said such a policy would not be extended to power generators.
Shares in energy companies Centrica and SSE each rose 3% following the announcement.
The Government introduced a new tax on energy companies known as the Energy Profits Levy in May to raise around £5 billion.
It came after BP and Shell both reported big gains in profits as global oil and gas prices plummeted after demand surged due to the easing of Covid restrictions around the world and also amid supply concerns following the invasion of Russia – a major fossil fuel exporter skyrocketed Ukraine.
There is hope that the windfall tax – a one-off tax imposed by a government on a company – could be used on UK oil and gas producers to help households who are eating into budgets with rising energy bills.
- How will the £5bn windfall tax on energy companies work?
Asked Monday whether the windfall tax would be extended to electricity generators, the Prime Minister’s spokesman said: “We would not seek new policy or major tax decisions.
“So there are no plans to do that.”
The spokesman said the government would “continue to assess the extent of the gains and consider appropriate steps” but had “no plans to introduce or extend this to this group”.
The BBC has reached out to the Treasury for comment.
Labor has urged the government to consider “backdating” its current energy profits levy to January to collect “additional tax revenue” from oil and gas companies.
Shadow Treasury Secretary James Murray claimed the extra months could add an additional $1.9 billion.
Typical household electricity bills could reach more than £3,300 a year this winter, after rising by £700 a year in April, according to the latest forecasts.
A series of government payments to help with bills will begin next week. The Government has announced that all UK households will receive a £400 rebate on their fuel bills, while beneficiaries will receive an additional £650.
But Labor’s Mr Murray said a total of £200m in public money would go to people with multiple properties as the household energy support package was “cobbled together” at the last minute.
“That’s not fair. It’s not a good use of public money,” he added.
The possibility that a windfall tax could also hit power producers, including renewable energy operators, was first reported by the Financial Times.
Sources close to the Treasury Department – as they pondered how to impose an unexpected tax on such producers – pointed out that renewable and nuclear power producers also made record profits as electricity prices soared. They also benefited from additional profits because they do not depend on expensive gas to generate electricity.
However, energy companies warned that an attempt to extend a windfall tax to renewable energy could destroy investor confidence ahead of key auctions for licenses to develop new wind and solar projects.
The head of one of the UK’s largest investors in renewable energy has previously said its profits from renewable energy generation have been in the low hundreds of millions for a full year, compared to the 7 billion months in 2021 alone.
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