A tax on windfall profits earned by vertically integrated energy groups since the beginning of the energy crisis will be applied over two stages, the first covering the period between October, 2021 and March, 2022, and the second between April and June.
RAE, the Regulatory Authority for Energy, has already begun working on details concerning the first period, but more processing is needed before the windfall profit tax, set at 90 percent, can be imposed.
Also, a ministerial decision from the energy and finance ministries, required by a legislative revision concerning the windfall profits, is still pending. It will specify amounts to be taxed.
Tax collections through this extraordinary measure, to help fund support for consumers through the energy crisis, are not expected to begin until September.
Electricity producers have called for their total cost of discounts and fixed electricity tariffs offered in the market to be deducted from an extraordinary 90 percent tax to be imposed on energy-crisis windfall profits, rather than a deduction of just a percentage of this total cost, as is currently planned.
If the total cost of discounts and fixed electricity tariffs is not deducted from the extraordinary tax, introduced to help fund energy-crisis support measures, then it makes no sense for producers to keep offering discounts, company officials argue.
Heavy taxation after having offered discounts and low fixed tariffs is pointless, especially amid a period of energy crisis, they added.
In other parts of Europe, producers are being offered incentives to maintain tariffs at fixed levels as this approach offers protection at a turbulent time for electricity prices.
The extraordinary measure is planned to tax windfall profits earned by electricity producers between October, 2021 and March, 2022.
RAE, the Regulatory Authority for Energy, is examining objections and observations made by electricity producers in response to the authority’s report on sector windfall profits, headed for taxation.
The electricity producers, including vertically integrated energy groups with retail representation, have objected to details of a formula applied by the authority to determine excess profits during the ongoing energy crisis’ period between October, 2021 and March, 2022.
The producers, claiming the report’s findings are erroneous, want a series of additional factors to also be taken into account, including discounts offered to customers, losses incurred through fixed tariffs, as well as financial costs resulting from initiatives taken to boost cashflow.
Energy ministry Kostas Skrekas has asked RAE to take into account the factors raised by electricity producers before delivering a finalized windfall profit figure, expected imminently.
The government is preparing a legislative bill for a 90 percent tax on windfall profits once RAE has delivered its finalized figures, sources informed.
The RAE report has valued the total sum of windfall profits earned during the aforementioned six-month period at 927.44 million euros.
Power utility PPC holds the lion’s share of this amount, 729.91 million euros, while the independent players Mytilineos, Elpedison, Heron and RES producers active in the market are linked to the remaining amount.
RAE, the Regulatory Authority for Energy, has completed an inquiry into windfall profits earned by electricity producers during the energy crisis and is set to forward its results to the government and energy ministry this coming Friday, once they have been endorsed by the authority’s board, energypress sources have informed.
The inquiry covers the period up to the end of 2021. The government has announced windfall profits will be heavily taxed.
To determine profits in electricity production, RAE officials took into account electricity production-unit profit levels every 15 minutes, the frequency at which energy exchange offers are made, for all facilities of all production technologies (natural gas, lignite, renewables) and then compared these results to annual profit figures posted by each producer.
Though the amount of windfall profits resulting from RAE’s inquiry is not yet known, the results are not expected to be spectacular, according to energypress sources.
Just over a month ago, Prime Minister Kyriakos Mitsotakis announced that a 90 percent tax rate will be imposed on windfall profits earned in electricity production.
RAE will follow up with an inquiry into possible windfall profits in the wholesale and retail gas markets, as well as electricity supply.