New ‘super tax’ to deter energy firm owners from gas profiteering
Treasury officials have quietly introduced a new “super tax” to deter energy company owners from cashing out lucrative contracts for gas bought in advance before leaving their supply business to go under.
The government quickly pushed through the new laws late last week to counter industry concerns that Stephen Fitzpatrick, the founder of Ovo Energy, could use his almost two-thirds stake in the company to liquidate its long-term gas contracts and exit the supply market with a hefty profit.
Energy industry sources believe this loophole may have already been used by BP, which owned almost a quarter of Pure Planet before pulling the plug on the challenger brand last October. It is understood to have sold the energy it bought in advance, using the profit to pay back loans to BP.
Under the government’s new super-levy, called the public interest business protection tax, a 75% tax will be imposed on any future windfall that an energy company shareholder could hope to make by cashing out gas contracts while leaving millions without a supplier.
Many of the suppliers that have gone bust did not have long-term energy contracts, known as hedges, in place. However, those that did buy gas in advance, before markets reached record highs last year, have found the value of the contracts has rocketed.
Ovo Energy said the new levy had its support, and that it had “been clear for some time that action was needed” to help protect households and taxpayers.
The Guardian understands that the tax was ushered in to block any financial incentive for energy company owners to make a fortune off the loophole, and to provide a “safety net” for household bill payers and the public purse that would otherwise have to bail out customers left behind.
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