Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether he or his officials have held discussions with their counterparts at the Department for Business, Energy and Industrial Strategy on the Electricity Generator Levy and work to disincentivise unabated fossil fuel generation, including meeting the Government's decarbonisation commitments.

As announced at Autumn Statement from January 2023 a 45% tax is being levied on the extraordinary returns being realised by certain electricity generators. This will help fund support for households and business with their energy bills as well as vital public services.

The levy will only be applied to extraordinary returns defined as returns from selling electricity for a period at an average price of more than £75/MWh. This is approximately 1.5 times the average price of electricity over the last decade. The Government considers this to be a proportionate approach to recovering a share of the extraordinary returns electricity generators are receiving while leaving generators a share of the revenue from high electricity prices. HM Treasury has worked closely with the Department of Business, Energy and Industrial Strategy on the levy.

The Office for Budget Responsibility considered the impact of the levy on its economic and fiscal forecasts which was published at Autumn Statement in its economic and fiscal outlook.