Finance (No. 2) Act 2023

279 Charge on exceptional generation receipts U.K.

(1) If a qualifying generating undertaking has exceptional generation receipts for a qualifying period, that undertaking is liable to pay a charge equal to 45% of those exceptional receipts.

(2) The charge is referred to in this Part as the “electricity generator levy”.

(3) A generating undertaking is “qualifying” in a qualifying period if generation attributed to it under this Part (see section 282, but also sections 294 to 297) for that period exceeds the levy threshold.

(4) The levy threshold for a qualifying period is—

(a) where the period is a year, 50,000 megawatt hours, or

(b) where the period is shorter than a year, that number of megawatt hours multiplied by the amount given by dividing the number of days in the period by 365.

(5) To determine if a generating undertaking has exceptional generation receipts for a qualifying period and (if so) the amount of those receipts, take the following steps—

• Step 1 (attribute generation receipts)

  Determine the amount of generation receipts to be attributed to the undertaking for the period in accordance with section 283.

• Step 2 (determine the maximum amount of receipts that would not be exceptional)

  Multiply the amount of electricity generation (expressed in megawatt hours) attributed to the undertaking for the period (see section 282) by the benchmark amount (see section 281).

• Step 3 (determine whether undertaking has receipts that exceed that amount)

  Subtract the result of Step 2 from the amount determined under Step 1.

  If the result of this Step is nil or less, the undertaking does not have any exceptional generation receipts (otherwise, carry on to Step 4).

• Step 4 (subtract allowable costs)

  Determine the amount of allowable costs (if any) to be attributed to the undertaking for the period (see section 284) and subtract that amount from the result of Step 3.

  If the result of this Step is nil or less, the undertaking does not have any exceptional generation receipts (otherwise, carry on to Step 5).

• Step 5 (apply revenue allowance)

  Subtract the revenue allowance for the period from the result of Step 4.

• Step 6 (result of Step 5 is amount of exceptional generation receipts unless negative)

  If the result of Step 5 is nil or less, the undertaking does not have any exceptional generation receipts.

  Otherwise, the amount of exceptional generation receipts the undertaking has for the period is the result of Step 5.

(6) For the purposes of Step 5, the revenue allowance for a generating undertaking for a qualifying period is—

(a) where the period is a year, £10 million, or

(b) where the period is shorter than a year, £10 million multiplied by the amount given by dividing the number of days in the period by 365.

(7) Other provisions in this Part may affect the determination of exceptional generation receipts, including—

(a) section 293, which contains provision attributing amounts from a joint venture to its participants,

(b) sections 294 and 295, which contain provision that attributes generation to participants in a joint venture in certain circumstances,

(c) sections 296 and 297, which contain provision that attributes generation to significant minority shareholders in a generating undertaking in certain circumstances, and

(d) section 308, which contains anti-avoidance provision.