The government has approved an amendment to the Energy Act, which sets maximum caps on energy prices and at the same time a levy on excessive revenues of electricity producers, effective from 1 December 2022. The amendment has been approved to comply with an EU Council Regulation addressing high energy prices. While the respective regulation sets a maximum energy price cap of EUR 180 per MWh, the Czech government has decided to differentiate price caps according to the type of generation source based on their variable costs and including a reasonable profit. The price caps will range from EUR 70 to EUR 240, with the lowest value applying to electricity generated by nuclear power plants and the highest to energy from gaseous biomass fuel.

The subject of the levy will be the market income from the sale of electricity in the period from 1 December 2022 to 31 December 2023. Producers will send the levy on excess income to the state in the form of advance payments each month, amounting to 90% of income above the price cap. The levy does not apply to producers operating production facilities up to and including 1 MW, pumped-storage hydroelectric plants or biomethane plants.

Together with the windfall tax, this is the second burden on energy companies in the fight against high energy prices.

Author: Lukáš Pflug, Tereza Horáková