I thank all noble Lords who have tabled amendments in this area, on the energy profits levy, including an amendment that seeks to reduce the costs of electricity to consumers.
I start with Amendment 13, tabled by the noble Lord, Lord Teverson, which would require the Secretary of State to publish a report on the additional revenue
that could be raised from expanding the energy profits levy. I shall say something very similar to what I said to the noble Lord, Lord Foster, that all taxes are kept under review, and any changes in tax policy should be considered and announced by the Chancellor, in line with the usual Budget processes. The Treasury view, therefore, is that this amendment is not appropriate for this Bill.
The energy profits levy has been designed with a bespoke tax base, appropriate to respond to the extraordinary global context of high oil and gas prices. The levy is expected to raise substantial revenue while providing companies with a new incentive for investment. It is right that we continue to encourage investment in North Sea oil and gas to strengthen the UK’s vital offshore oil and gas sector and bolster our future energy security. The amendment would also require the Government to produce an estimate of upstream profits expected in the next two years. Such estimates will be highly sensitive to commodity price fluctuations. Given the volatility in prices since last year and that most companies’ out-turn profits are publicly available, it is not clear that producing such an estimate would be a beneficial use of public resources.
I turn to Amendment 14, tabled by the noble Lords, Lord Lennie and Lord McNicol. This amendment requires the Secretary of State to publish a report on the impact of removing the investment allowance in the energy profits levy. The Treasury has made clear its view that it is not for this House to discuss the matters raised by this amendment in relation to this Bill, on the basis that fiscal issues are a matter for the House of Commons. Tax policy changes are an area for the Treasury, which believes that the Chancellor should consider and announce any changes in line with the usual Budget process. Taxation on the profits of oil and gas producers is not in scope of this Bill. The energy profits levy, introduced under the Energy (Oil and Gas) Profits Levy Act 2022, has been in place since May. It is not standard for the Government to publish assessments of the economic impacts of measures that they are not introducing. The Government already monitor the UK oil and gas sector; data on upstream production is published regularly on GOV.UK. It is not clear how a report on the impact of a hypothetical change would be a beneficial use of public resources.
I turn to Amendment 15, also tabled by the noble Lords, Lord Lennie and Lord McNicol, which would require the Secretary of State to publish an assessment of the revenue and profits of electricity generators and oil and gas producers every six months. The profits of oil and gas producers are not in scope of these measures but are subject to the energy profits levy, which has been in place since May. The out-turn revenue and profits of most electricity generators are already in the public domain, so I do not believe this amendment is necessary. The objective of the Energy Prices Bill is to protect consumers from very high energy prices. We recognise that we must strike a balance that is fair to generators, achieves value for money for consumers and maintains investor confidence. That is why it is appropriate that the House gets the chance to debate fully the first set of regulations made under the temporary cost-plus revenue limit.
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I turn to Amendment 16, proposed by the noble Lord, Lord Rooker. The Government are seeking powers to introduce a new temporary cost-plus revenue limit for low-carbon generators not already on a contract for difference, limiting the revenue they are able to achieve in the wholesale electricity market. This amendment would mean that the temporary cost-plus revenue limit would not apply to low-carbon energy generators that have fuel import costs. It would affect biomass and nuclear technologies that can provide dispatchable and baseload power. Of course, we recognise the value of the power that these technologies can provide, hence we have been clear that we are giving careful consideration to their specific arrangement as part of the detailed policy design. However, it is right that no generators should receive excess revenues just as a result of Putin’s illegal invasion of Ukraine. The precise scope and mechanics of the temporary cost-plus revenue limit will be subject to an appropriate consultation to be launched shortly.
I turn to Amendment 20, proposed by the noble Lords, Lord Lennie and Lord McNicol. The cost-plus revenue limit is a temporary measure to break the link between extraordinarily high gas prices arising from the invasion of Ukraine and the cost of production of low-carbon generators not already on a fixed-price contract. I agree that we need a long-term solution, which is why the Government have launched a review of electricity market arrangements. As I said earlier in Committee, the review is considering a broad range of reforms, including ways in which we could decouple gas and electricity prices. It is important that we do not prejudge the correct solution in our haste to tackle the present crisis. I must therefore resist this amendment. The Government have recently concluded a consultation on the review. We will pursue reforms at pace to ensure that our electricity market is fit for purpose and delivers secure, low-cost, low-carbon electricity for the long term. I hope that the noble Lord will therefore not press the amendment.
Finally, I turn to Amendment 30 tabled by the noble Lords, Lord Lennie and Lord McNicol. It is my firm belief that this amendment is not necessary. As I have mentioned before, the Bill does not legislate for oil and gas producers. We are imposing the cost-plus revenue limit on some low-carbon electricity generators. This is subject to consultation and the drafting of secondary legislation. The amendment would prejudice the outcome of that consultation and development of secondary legislation, which of course will be debated fully in this House. Therefore, I hope that the noble Lord will feel able not to press his amendment.