It is already “challenging” to secure investment in the low-carbon generation plants mooted for inclusion in the energy windfall tax, Kwasi Kwarteng has told MPs.
Appearing at the Business, Energy and Industrial Strategy (BEIS) Committee on Tuesday, the secretary of state for business and energy was probed on a report in the Financial Times that the Treasury is exploring moves to extend any windfall tax on gas and oil producers to electricity generators.
Many generators, including nuclear and renewables, are currently making bigger than expected profits due to high wholesale electricity prices.
But Kwarteng pointed out that the government wants to see significant investment in low-carbon generation in order to meet its 2050 net-zero target.
He said: “We are asking generators to deploy record amounts of capital to build the infrastructure we need to hit the net-zero target. That’s a challenging proposition.”
Kwarteng also rejected a suggestion that Ofgem requires additional powers to crack down on poorly run suppliers which have subsequently gone bust.
He said: “They (Ofgem) should have used existing powers and could have been more rigorous in terms of looking at whether people were fit and proper.
“They should have done the job more thoroughly.”
Any moves to prevent investors from recouping their cash when suppliers go out of business would stymie investment in the sector, Kwarteng said: “If creditors were not going to get their debt paid, nobody would ever invest in these companies, and it would essentially kill the industry.”
He also defended the government’s decision to keep Hayden Wood, chief executive of Bulb, in his £250,000 per annum job after the company entered the special administration regime last year.
“The point of the special administrative regime is smooth handover. In order to smooth the process, we kept him in place. Another CEO would have asked for higher remuneration than Hayden Wood. In the round, it made sense to keep him on same terms as he had before,” Kwarteng said, adding there was a risk that the government would have been unable to find another suitably qualified individual to oversee the company until it was sold.
Responding to a question on industry calls for a social tariff, which would provide cap bills for lower income customers while allowing the rest of the market to return to a more competitive footing, Kwarteng said that the winter fuel payment and the Warm Home Discount schemes offered protection for these poorer households.
Asked to express confidence in Ofgem’s chief executive, he said that Jonathan Brearley is doing a “very good job and has worked extremely hard”.