UK Raises EGL Tax, Citi Skeptical

UK government announced on April 21 to increase Electricity Generator Levy from 45% to 55% effective July 1 and introduce voluntary CfDs.
Citi Research says unchanged £75/MWh EGL threshold makes the higher tax unlikely to lower power prices or delink electricity from gas.
Analysts maintain Sell rating on SSE plc (target 2,036p) and Buy rating on Centrica plc (target 218p) after modest stock recoveries.
Citi values Centrica using SOTP with £65/MWh power price, 65p/therm gas price, 8.5% WACC; SSE uses 6.5% renewables, 4% regulated WACC.