Greece to tax power producers’ windfall profits

Greece will tax windfall profits of domestic electricity producers in order to secure funds to help consumers cope with high prices.

The Government of Greece will set a 90% levy on the windfall profits of the domestic power producers, according to the Ministry of Environment and Energy.

The ministry said the tax would be calculated for the period October 2021 – March 2022.

According to the country’s energy regulator, RAE, these profits are estimated at more than EUR 900 million. At the same time, the state-owned power utility, PPC, has already given up EUR 336 million to help consumers.

Of note, the European Commission has backed taxing windfall profits to mitigate high energy prices, but for a limited period and linked to predefined market conditions.

Romania has decided to introduce such a tax, and electricity producers there, except for power plants that run on fossil fuels, will pay a special 80% tax on revenues from prices higher than EUR 91 per MWh.

However, Eurelectric has warned that any distortive wholesale market intervention, like measures related to windfall profits or the introduction of price caps, risks jeopardizing trust in the EU’s integrated energy market, severely damaging the investment climate and raising a set of complex legal issues as well as political stakes.