Ministers are considering introducing a windfall tax on firms that have benefitted from soaring wholesale gas prices in recent weeks as energy firms struggle, the business secretary has suggested.
Kwasi Kwarteng did not rule out such a move when asked by the Business, Energy and Industrial Strategy Select Committee about the possibility of a levy on “the generators and traders who are making very significant profits", which has been used in Spain, to fund protections for customers.
“We are looking at all options,” Mr Kwarteng told the committee. “What they are doing in Spain is recognising that it's an entire system - the energy system is an entire system.
“I am in discussion with Ofgem and other officials, looking at all options.”
However, the minister added that he was “not a fan” of windfall taxes in principle, despite the option being considered in order to protect the UK’s energy system.
His comments came as Avro Energy and Green Supplier Limited became the latest energy suppliers to go out of business due to the price spike, with about 1.5 million customers now affected by firms leaving the market this month.
The UK’s electricity and gas regulator Ofgem has said that it will ensure that a new supplier is appointed to take over Avro's 580,000 customers and Green's 255,000 households, which collectively supply 2.9 per cent of the UK's domestic energy customers.
The regulator also said on Wednesday that households could continue to use gas and electricity as before while a new supplier is found.
“Under our safety net we'll make sure your energy supplies continue. If you have credit on your Avro Energy or Green Supplier Limited account this is protected and you will not lose the money that is owed to you,” Ofgem director of retail Neil Lawrence said.
Additional reporting by PA