The so-called windfall profit tax would apply to producers of electricity that produce electricity using sources other than natural gas. With its proceeds, european Union governments would compensate households for the increase in energy costs.
New tax from the European Commission
The European Commission intends to propose the introduction of a windfall tax for situations where producers sell electricity at a price higher than €200 per megawatt hour. A tax on windfall profits thus constructed would have a de facto price cap effect on electricity. However, the levy would only apply to producers who produce electricity using sources other than natural gas.
Measures against rising electricity prices
The wholesale price of electricity on the stock exchange has skyrocketed, among other things, because it is tied to the price of natural gas. The price of electricity depends on the most expensive source that is used to produce it. The most expensive is natural gas at the moment, while electricity from nuclear, coal or renewable sources is much cheaper to produce. According to the European Commission, the introduction of windfall tax would also contribute to decoupling the price of electricity from the price of natural gas, as producers would have an incentive to use it as little as possible.