RAAEY, the Regulatory Authority for Waste, Energy and Water, has proposed setting an earnings rate limit of 25 euros per MWh for electricity suppliers, meaning anything above this level would be regarded as windfall earnings and need to be recovered by the state.
This limit is the final pending detail in the energy ministry’s new formula for calculating windfall earnings concerning electricity suppliers.
Once finalized, the formula will be applied to supplier earnings covering a five-month period from August to December in 2022.
It remains unclear when this windfall earnings recovery mechanism will be implemented. The energy and finance ministries still need to issue a related ministerial decision. Also, the current pre-election period ahead of next month’s general elections may delay the plan.
The 25 euros per MWh limit proposed by RAAEY takes into account overall supply sector averages for operating costs, bad debt provisions, and a reasonable profit margin.
Suppliers will be expected to return 60 percent of any windfall earnings resulting from the formula as an initial payment before returning the other 40 percent at a latter date.