The Minister of Industry and Trade, Jozef Skela, confirmed today that two identical proposals will be on the table at the extraordinary European Council for Energy, how to relieve households and companies in the EU from high energy prices.
The first report on the ceiling price of gas for the production of electronics. (This intervention cannot be combined with another proposal, which will be discussed on Friday, and that is the ceiling on the price of Russian gas through the pipeline to the EU.)
On the other hand, the type of draft in the ceiling needs, or the profit of practically all other power plants, not the gas ones.
First of all, it means that if the limit for the price of gas, which is used to make electricity, is set, the price of electricity on the stock exchange would fall. The price of electricity on the stock market depends on the price of the general source, which is currently the most expensive source. And that is the first gas in these months. Due to the fact that Russia has sharply limited its supplies to the EU. Equally, this first of all means that the gas supplier must compensate the state. Therefore, gas suppliers have to pay the difference between the stock market price of gas and the artificially inflated price, for which the gas is sold to the power plant, from the taxpayer’s money.
Spain and Portugal were the first to introduce this method. Unless they were allowed to do so by the European Commission at the time, or their energy market is known to be relatively separate, or even isolated, from the EU market. Both because of the removal of the Iberian Peninsula by the Pyrenees, and because of the relatively low capacity of the energy transmission between Spain and France. That is why Ibersk is sometimes an exception to this first rule. It bears holy fruit. The average wholesale price of electronics in Spain in August was 67 percent lower than in Germany, and even 69 percent lower than in neighboring France, the AEGE analysis found. The problem is that the Iberian exception does not provide sufficient motivation for questionable gas loading. Just subsidize the gas in Madrid or Lisbon, then artificially discount it for the debt of households and companies.
As of this weekend, according to a source from the Bloomberg agency, the Czech EU presidency has agreed that the application of the Iberian exemption to the entire EU will be the main proposal.
Last week, however, some media published another, alternative proposal, written by the European Commission. This is therefore a different kind of design here, connecting to the need for roofing, or the profit of practically all other power plants, not the gas ones. At the weekend, Germany and France supported this proposal. So even the EU vetoes stood up for him, which proves that on Friday he should have the upper hand over the Iberian exception applicable to the entire EU. Today, during the thanksgiving, Minister Skela hinted that the Czech Republic could be leaning towards this kind of option. He revealed the main disadvantage of the Ibersk exception, that is, that it does not motivate gas consumption. Given the limited gas consumption, it is understandable that things cannot be done.
This type of protection does not lead to a decrease in the stock market price of electricity. Ceiling need, or but the profit would mean that, for example, wind, solar or nuclear power plants will have the confiscation of a substantial part of their profit. This is above the set ceiling, but it would be different for each type of power plant. One would therefore be for solar, another for wind, and yet another for nuclear or even coal-fired power plants.
In its own way, this is a massive subsidy of fossil fuels from the profits generated by renewable sources, such as nuclear, coal and hydropower plants. The EU states would then confiscate the biggest profit of electricity using renewable sources, which are the cheapest and currently have the highest price (which is the difference between the total price of electricity and the production price of electricity of the given source). These funds would finance aid to vulnerable households and companies, including those that use fossil energy, such as electricity from gas and coal.
The problem is, over which limit would the confiscation be reached, so how high the ceiling would be. According to long information, the leak to copper should, for example, in the case of nuclear electricity start at 200 euros per megawatt hour. In the case of transactions realized in the framework of instantaneous (spot) exchange trading, on the day of delivery, the power plant would transmit an error if it reached the ceiling. They would therefore hand over the amount corresponding to the difference between the current thorn (stock exchange) price and the established ceiling.
The proposal of the European Commission, according to its own interpretation, is not compatible with the tax on extraordinary profits imposed on energy companies. By the end of this week, Fial’s government should have definitively announced whether and to which sectors it will be applied. But if the Brussels proposal finally passes, it is supported by Berlin and Pa, nay, it seems that even in Prague, Fial’s government will have to pay back taxes on EZ and domestic energy companies.
For the EZ itself, the proposal of Brussels should be far more suitable, not if the Violet government would apply a tax on it. Bad ove on the level of the ceiling. If it corresponded to the above 200 euros per megawatt hour, EZ’s profitability would not have to be significantly affected. That’s because he sold a significant amount of electronics, or prodv at a price below this limit.
Luk Kovanda, Ph.D.
Chief Economist, Trinity Bank
Trinity Bank has been operating on the financial market for 25 years, and the transformation of the Moravský Penn status of the cooperative was created. It has 25,000 clients and its balance sheet totals K18 billion.
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