Energy associations and suppliers are taking a stand against the federal government’s plans to skim off “accidental profits” on the electricity market to co-finance the electricity price brake. The draft law violates EU law and violates the property guarantee, said the Hamburg energy supplier Lichtblick on Thursday, citing a commissioned legal opinion.
“The planned skimming mechanism will lead to far-reaching distortions in the German electricity market.” The consequences of these developments are rising electricity prices for consumers, an obstacle to the further expansion of renewable energy plants and, in individual cases, the insolvency of plant operators. The “Frankfurter Allgemeine Zeitung” reported about it first.
Sharp criticism of the draft law, which is currently still being coordinated within the federal government, also came from the Federal Association of Renewable Energies. President Simone Peter said on Thursday at the request of the German Press Agency: “There are considerable constitutional and European law concerns. Retrospective interventions in economic processes have already been decided several times as clearly unconstitutional.” The association had already stated that a wave of lawsuits was to be expected. The federal government should choose a simple tax solution for legal reasons alone.
“Accidental profits” are to be skimmed off
A draft law by the Chancellery, the Finance and Economics Ministries provides that “accidental profits” from companies on the electricity market will be skimmed off retrospectively from September 1 until at least the end of June next year in order to co-finance the electricity price brake. This affects producers of green electricity from wind and sun, for example, who have recently benefited from high prices on the stock exchange. The background to this is the sharp rise in gas prices and the pricing mechanism on the electricity market. The largest part of the electricity price brake is to be paid for by the state.
According to the draft law, many electricity producers are currently generating considerable additional income, most of which was unexpected. We’re talking about “excess revenue”. In principle, these should be calculated using the prices on the spot market or monthly market values specific to the energy source for wind energy and solar systems. In addition, the results of hedging transactions on the futures market and plant-related marketing could be taken into account – in particular so-called power purchase agreements.
These are special, often long-term power purchase agreements. According to Lichtblick, it is now planned in many cases not to skim off these contracts according to the fixed prices agreed between the operator and buyer, but according to the spot market – although the plant operator does not sell his electricity on the spot market. The spot market prices are often significantly higher than the agreed prices. The report speaks of “fictitious proceeds” that the government wants to siphon off – but which the companies actually never generated. This should apply to contracts that are concluded from November. However, according to EU regulations, this is not permitted. These only allowed the skimming off of realized proceeds.
Is there a wave of lawsuits?
Lichtblick expects a wave of lawsuits. According to the announcement, chief lawyer Markus Adam spoke of an “unconstitutional special levy”. One way out would be a “genuine excess profit tax” for renewable energies. The state should also tax the plant operators’ actual profits, which have increased as a result of the crisis.
Criticism of the draft law came from the Federal Association of Energy and Water Management, among others. In view of the sharp increase in “accidental profits”, the energy industry is committed to its responsibility, BDEW President Marie-Luise Wolff explained: “The energy industry is ready to make its contribution.” Skimming off the proceeds is a significant market intervention and must be kept as short as possible with a clear end date of June 30, 2023. The BDEW also criticized that planned regulations to relieve the budget would have to be greatly simplified.
The electricity price brake is intended to relieve households and companies with very high electricity prices. Households and smaller companies receive 80 percent of their current electricity consumption at a guaranteed gross price of 40 cents per kilowatt hour. Companies with high power consumption should get 70 percent of their current power consumption at a guaranteed net working price of 13 cents per kilowatt hour. The brake should apply from March, and then the relief amounts for January and February should also be paid out.
