Levy on energy firms’ profits

Mitsotakis announces special tax on excessive earnings reaped by power companies

Levy on energy firms’ profits

Energy companies will pay an extraordinary levy on their excessive profits that the conjuncture has brought them, Prime Minister Kyriakos Mitsotakis announced on Wednesday in Parliament.

He has therefore put an end to talk generated within Greece after the European Commission approved the financing of consumer protection measures against high electricity and natural gas rates.

The new measure has hardly surprised anyone in the local energy market, as all signs in recent weeks had pointed in that direction. That was why the Regulatory Authority for Energy (RAE) started submitting quantified data to the PM’s office and the Energy Ministry last week on the profit margins of each production unit per hour and per day.

The enterprises active in the wholesale market, practically the four major players (Public Power Corporation, Mytilineos, Elpedison and Heron), are waiting for the details of the measure Mitsotakis announced, though there is a widely shared impression that this will be a complicated exercise, as the PM appeared to concede too. These are verticalized corporations, meaning that they are active in production and supply, while some of them also have broader activities.

“Neither I nor the Finance Ministry will hesitate to legislate an extraordinary levy,” said the prime minister, adding he has already ordered RAE to start analyzing the data of all energy companies. The government, noted Mitsotakis, will act based on the RAE conclusions, and asked for the opposition to stop accusing the government of caving in to the industry’s interests.

Mitsotakis made it clear that there will be an extraordinary levy on the excessive profits of the companies – and not of the production units – once they are determined by RAE. He also suggested that chartered accountants will assist in the process, with RAE likely hiring them, and clarified that to determine the excessive profits, the discounts that companies offer their retail customers will have to be deducted.

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