Business secretary Jacob Rees-Mogg has been criticised for failing to properly consult the energy sector before “suddenly” announcing a windfall tax on renewable companies.
In a harsh criticism of the way the new policy was unveiled, Lord John Hutton, chairman of industry body Energy UK, said it was “not helpful to make announcements like this without a proper consultation of industry”.
The plan, announced by the government late on Tuesday night, involves capping the revenues of renewable power companies.
It will curb the amount renewable and nuclear electricity generators in England and Wales can make in revenue “allowing generators to cover their costs, plus receive an appropriate revenue,” the department for business, energy and industrial strategy said.
Labour called the rushed policy announcement a “screeching U-turn from a government in office but not in power.”
Now Lord Hutton, of Energy UK, a trade association for the energy industry, has said that the announcement was “sudden and unexplained”.
He criticised the government for shaking investors confidence, saying: “Investors have real choices to make about whether they decide to commit resources.
“It is so easy to negatively affect investor confidence in the UK if you make sudden and unexplained new policy announcements that change the ground rules on which investment decisions are made.”
He continued: “Yesterday’s announcement about the revenue cap on certain low carbon generators is, I think, a pretty good example of this.”
Lord Hutton, who was a minister in Tony Blair’s Labour government, hit out at government for apparently gagging Energy UK during early discussions about the policy, leaving them unable to perform “the proper role of a trade association”.
He said: “It’s not helpful to make announcements like this without a proper consultation of industry and it’s particularly unhelpful to use non-disclosure agreements during the initial phases of discussions, which have effectively prevented Energy UK from performing the proper role of a trade association.
“We really have to have better engagement on this. The government has to in particular commit to a full and open consultation on how the new revenue cap is going to work.”
His comments came as the head of energy regulator Ofgem told customers to reduce their use of electricity and gas at home over the winter.
Speaking to the Energy UK’s conference in London, Jonathan Brearley said that “all of us could be thinking about how to reduce our energy use where possible”.
“This is not only the most direct way to reduce our bills - it helps with security of supply, contributes to decarbonisation and saves money for public finances,” he said.
A spokesperson for the Department of Business, Energy and Industrial Strategy said: “Asking for NDAs to be signed ahead of conversations like this is nothing out of the ordinary and enabled the very conversations Energy UK is asking for to take place.
“We will be running a public consultation on the fuller details of the temporary Cost-Plus Revenue Limit shortly.”
