Energy smash-and-grab?

It's perhaps a little surprising that the power companies are doing their very best impression of Messrs Scrooge at the moment, given that their regulator, Ofgem, has alerted the government to the possibility of a nine billion quid windfall tax.

It's complicated, but bear with us. The European carbon trading scheme comes online fully in 2012, at which time any polluters will have to buy permits to belch co2 into the atmosphere. To make sure the scheme comes in without too many hitches, these permits are to be given away free for the time being (how we move from free to paid-for is still TBA, as far as the European Commission is concerned).

What this effectively means is that energy companies are about to get a nine billion quid short-term windfall in the form of free permits the cost of which have already been factored into the cost of wholesale electricity.

As the FT's Jim Pickard points out, some MPs, including Elliott Morley and Colin Challen, are already saying this nine billion should be used for the public good. They're talking about things like "renewable energy projects," but given that everyone's talking up (talking down?) a recession, the chances of Alistair Darling ignoring a source of some free cash to shore up the Treasury are zero to none, we reckon. So it's probably not the best idea for the pesky power companies to build themselves up as Public Enemies numbers 1, 2 and 3 - otherwise Darling's smash-and-grab could be cloaked in the garb of Robin Hood.