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Gas and Electricity Predicament 2

Barry Loughran

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The energy companies have pleaded with the government not to introduce a new levy as they need to generate as much profit as possible in the UK to renew their existing power stations and build even more. According to one of the country's leading providers, they made just under £500,000 billion in 2007 which would not cover the cost to build a new power station.

Mr Porter, chief executive of the Association of Electricity Producers said: “Putting a tax on the electricity companies means they would lose money at a time when we need to spend £100billion on replacing old power stations over the next 11 years. Every pound taken from the companies would have to be raised by them elsewhere. In the credit crisis, that is difficult enough, but a raid on electricity companies’ bank accounts would send out a very unfortunate signal to the world of investment. "

The six largest providers from the UK earlier this year agreed to invest more money into reducing fuel poverty (when your bill is more than 10% of your income), they have agreed to invest £225 million over three years.

An industry insider stated that “The signal we are getting from government is that they are not minded to impose a windfall tax per se of the sort that was brought in after the 1997 election.

"However, they could yet impose a mini-windfall tax, for example by making a retrospective charge on carbon emission permits that were given free to energy companies or by choosing to auction the remaining 3 per cent of carbon permits that they are allowed to release, under European Commission rules. "

Utilities , gas and electricity prices will eventually be under control once the government and gas suppliers reach a deal to solve this problem, but for the meantime, many are set for a cold winter.


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