© Reuters. FILE PHOTO: An engineer maintains a high voltage electricity pylon near the town of Trutnov February 26, 2012. REUTERS/David W Cerny/File Photo
By Jan Lopatka
PRAGUE (Reuters) – The Czech government approved revenue cap plans for electricity companies on Wednesday, part of plans to fund measures to ease the burden of soaring prices on households and businesses.
This will combine with a windfall tax imposed on energy companies and the country’s biggest banks to raise at least 100 billion crowns ($4.12 billion) next year.
The proceeds will fund compensation for electricity customers affected by soaring prices since Russia’s invasion of Ukraine.
The cap will increase revenues by “several tens of billions” of crowns next year, higher than previous estimates, the Czech finance minister said on Wednesday.
The government has dismissed criticism that its schemes amount to double taxation and go beyond measures agreed at European level.
The approval of the Czech Parliament will be required for the ceilings which, if applied, will range from 70 euros per megawatt/hour of electricity produced in nuclear power plants to 240 euros for the production of electricity fired with gas from biomass. The state would then take 90% of the income from companies above this ceiling.
The cap will also apply to generation based on futures sold in the past, taking into account that producers like the nation’s largest utility, CEZ, have already pre-sold most of their generation for 2023.
The Czech price cap is based on the European Union’s agreement to cap electricity producers’ revenues at 180 euros per megawatt hour, which allows member states to modify this figure for individual power plants depending on the type of fuel they use.
The ceiling for wind, solar and hydro sources will be 180 euros. For lignite power plants with a capacity of up to 140 megawatts, it will be 230 euros and 170 euros for large power plants.
While the revenue cap will raise more than 15 billion crowns initially budgeted, Finance Minister Zbynek Stanjura told reporters that it would on the other hand affect corporate profits and thus reduce government levies on a one-off tax, already approved by the lower government. house of parliament.
Overall, he said, the collection could exceed the budgeted 100 billion crowns.
The government plans to reduce the public sector deficit to 4.3% of gross domestic product in 2023, from 4.6% seen this year and over 5% recorded in 2021.
The majority state-owned CEZ is expected to be the most affected by the windfall caps and tax.
CEZ shares have lost a third of their value since June, when the first signs of a windfall tax and other measures emerged. They traded up 0.8% on Wednesday afternoon at 814.50 crowns.
The Czech revenue cap proposal goes beyond the EU deal by suggesting validity from December 1 this year until the end of 2023, while the EU deal only runs until as of June 30, 2023.
($1 = 24.2480 Czech crowns)