UK's Hunt hikes energy windfall tax, extends it to power firms

British finance minister Jeremy Hunt said on Thursday the government would increase a windfall tax on oil and gas firms and extend it to power generation firms as he seeks to raise money to plug a major hole in the public finances. Hunt said the levy would be increased to 35% from its current rate of 25%. This means generators of renewable power such as wind or solar and nuclear plants can benefit from high wholesale prices.

British finance minister Jeremy Hunt said on Thursday the government would increase a windfall tax on oil and gas firms and extend it to power generation firms as he seeks to raise money to plug a major hole in the public finances.

Hunt said the levy would be increased to 35% from its current rate of 25%. It would also apply to electricity generators with a levy of 45% being applied from Jan. 1. Soaring oil and gas prices in the wake of Russia's invasion of Ukraine have sent household energy bills to record highs, triggering Britain's worst cost of living crisis in generations.

Currently the cost of producing electricity from gas-fired power stations is usually the benchmark for setting the wholesale electricity price that helps to determine how much people pay for their energy. This means generators of renewable power such as wind or solar and nuclear plants can benefit from high wholesale prices.