UK wind company to take legal action against windfall tax

UK wind energy company Community Windpower will sue the UK government in an attempt to stop the Electricity Generator Levy, which is being described as “a smash and grab raid” on the renewables sector’s earnings.

The company said on Wednesday it has instructed London law firm Mishcon de Reya to take legal action early in the new year if the new levy is not changed.

The levy is set to come into effect on January 1, but is expected to be legislated in the Spring Finance Bill. The charge was announced in the Autumn Statement 2022, with draft legislation unveiled on December 20.

Community Windpower said that the 45% levy on exceptional receipts from the production of wholesale electricity, in combination with the corporation tax rate, will take its marginal tax rate to 70%. At the same time, the large profits made by oil and gas as a result of rising energy costs are being treated more favourably, the company argues.

“This measure not only leaves Ministers’ green credentials in shreds, it will also suck hundreds of millions of pounds out of investment in green energy, hammering renewable industries and costing high quality jobs,” commented Rod Wood, Managing Director of Community Windpower.

“The way this levy has been designed is completely at odds with the Government’s own stated objectives to transition the UK to a net zero economy and develop a secure supply of clean energy,” said Alexander Rhodes, partner at Mishcon de Reya.

The levy will be charged on exceptional receipts from wholesaling electricity above GBP 75 (USD 90/EUR 85) per MWh over an accounting period. It will apply to in-scope companies which generate over 50 GWh per year and will affect exceptional receipts exceeding GBP 10 million.

(GBP 1 = USD 1.207/EUR 1.136)

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