As two Big Four firms were called in to monitor the government’s £410m short-term bail-out, the struggling company, British Energy said it should not be required to pass on a climate change levy to its customers.
The company could save between £80m and £100m if it were to be re-classified – currently, it passes on a £4 per megawatt-hour levy to its business users, but the company has argued it should not be required to do so because it does not produce carbon dioxide emissions.
A spokesperson for British Energy said: ‘We have been making our position clear for sometime – without the levy we would be able to negotiate a better price with our business customers.’
The eco-tax applies to all business customers of coal, oil, gas and nuclear power stations.
It currently costs British Energy £19.46 to produce one megawatt-hour – higher than it is able to charge its customers, who have benefited from a 40% fall in energy prices over recent years. The removal of the levy would allow it to sell electricity for more than it cost to produce.
If the company is unable to answer the government’s concerns over its financial position, it could be forced to bring in administrators.
Earlier this month the DTI agreed to give British Energy a £410m short-term loan to allow the company to continue trading in the UK and North America. Deloitte & Touche has been brought in by the government to monitor how British Energy spent the loan, while KPMG has been appointed by the company to liaise with D&T.
In addition, the National Audit Office told Accountancy Age it was keeping a watching brief on how the Department of Trade & Industry was handling the issue, though there were no investigations currently underway.
The DTI loan gave the company a breathing period until 27 September by which time it sought clarification of the company’s financial position. ‘No decisions have been taken, and no commitments have been given, about support beyond this time,’ the DTI said.
The company is currently in negotiations with the government over a long-term rescue plan, and it is understood an exemption from the climate change levy could form part of a rescue package.
However, the DTI has refused to rule out any possible solution, including administration.
Yet, KPMG’s annual survey shows that the UK is still an attractive place to do business, despite falling in rankings in tax competitiveness and FDI appeal
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