Tonight:
5°c
Energy firms bid to beat threat of windfall tax
Evening Standard 27 Aug 2008
Energy firms appeared to be caving in to government threats of a windfall tax today by offering to boost their spending on tackling "fuel poverty".
The move by electricity and gas bosses came as they warned that imposing a swingeing tax would lead to higher bills for consumers.
The big six energy retailers - British Gas, npower, ScottishPower, E.ON, Scottish & Southern and Energy - agreed to spend an extra £225million over three years to reduce fuel poverty, the term for households that spend more than 10 per cent of their income on keeping warm.
Garry Felgate, chief executive of the Energy Retail Association, which is leading the discussions, said: "We are currently working with government on solutions to help them reach their 2010 targets on fuel poverty."
The industry said that a windfall tax would lead to more inflation-busting increases, with companies struggling to find money to invest in ageing power stations and networks.
"If you take money out of the companies and they have to find it somewhere else, then customers will have to bear the brunt of that," said David Porter, chief executive of the Association of Electricity Producers.
"There is a serious risk that bills would go up. There has been no windfall. Many of the retail arms of power companies have struggled to make money."
Chancellor Alistair Darling is wary of implementing a windfall tax similar to that imposed by Labour in 1997, but he could still make firms pay £500million more for carbon emission permits.
