The Government Tax on Electricity Production Deemed Unfair by Court of Auditors

The Government Tax on Electricity Production Deemed Unfair by Court of Auditors

The Court of Auditors estimated on Friday that the tax implemented by the government to capture the rent of electricity producers is unprofitable and unfair for consumers. The government argued that this tax was necessary to combat the superprofits of companies benefiting from the surge in energy prices due to the Russian invasion of Ukraine in 2022. However, the Court found that the revenue generated from this tax is not fair to consumers and does not return the margins accumulated by energy companies to consumers.

The Court criticized the government for not capturing most of the predictable profit margins to finance support for consumers. The yield from the tax and other measures should not exceed six billion euros in 2022 and 2023, compared to the net profit margins of over 30 billion euros recorded by electricity traders. The Court recommended changes to the tax and support measures to ensure that consumers pay prices that reflect the full production costs.

The Court also highlighted the complex implementation of multiple support measures for energy consumers, which were abundant and not targeted based on income or capacity to absorb the shock of soaring energy prices. The passing on of public support to customers through energy suppliers or fuel distributors raised questions of windfall effects and the need for stronger controls.

The president of the Energy Regulatory Commission publicly criticized energy suppliers suspected of not passing on rebates to customers. The Court recommended changes to improve the effectiveness and transparency of support measures and to better align prices with production costs. The government has not yet responded to these recommendations.

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