The Czech government has presented plans for a national cap on energy prices and a one-off tax, ahead of European Commission proposals due to be tabled on September 14. The Czech price cap is seen as a back-up plan in case a common European level approach is not achieved.

At Monday’s press conference, Czech Prime Minister Petr Fiala introduced price caps for households at CZK 6 (€0.24) per kWh of electricity and CZK 3 (€0.12) per kWh gas, which households should already see on their November bills, easing the cost of living crisis. The cap price is around €200 per MWh (excl. VAT), higher than the cap price of €180/MWh that the European Commission is expected to announce, along with proposals to force fossil fuel companies to share excess profits.

The measure is expected to cost a maximum of 130 billion Czech crowns (5.3 billion euros), which the state will finance using dividends from state-owned companies, as well as income from planned windfall taxes and quotas. resignation.

Finance Minister Zbynek Stanjura added that he expects revenue from windfall taxation next year to reach 70 billion CZK (2.9 billion euros). The legislation is expected to be in place for three years, but if the extreme circumstances driving high energy prices ease, companies will not be forced to pay the tax.

The European Commission will propose a 33% levy on companies’ excess profits – defined as profits above 20% of their average taxable profits for the past three financial years, Reuters reported.

Opposition parties, including the populist ANO party of controversial former prime minister Babis and the far-right SPD, have criticized the cap for being set too high and coming too late.

Public comments by cabinet members on the introduction of special taxation have been criticized in recent weeks by Czech right-wing media, neoliberal extremists within Fiala’s right-wing ODS party, as well as ANO.

The cap also applies to public service providers such as hospitals and schools, as Ivan Bartos, President of the Pirate Party and Minister for Regional Development, pointed out in his Facebook post, adding that “it is important to focus on the sources”.

“Energy companies today have above-average revenues due to rising energy prices, this is mostly coming out of household pockets and it is okay to return that money to households,” Bartos said.

Shares in CEZ, the majority state-owned utility, rose more than 4% on Tuesday on the announcement of the Czech government‘s plan as the cap was set higher and the windfall tax lower. provided that. According to Reuters, analysts said the price cap would still allow CEZ to sell power at higher prices than it had reserved for this year, while shareholder payouts could also be boosted as the government is turning to dividends to help pay for support measures.

The Czech energy market is dominated by CEZ, EPH, owned by billionaires Daniel Kretinsky and Patrik Tkac, and Czech coal tycoon Pavel Tykac’s Sev.En Group. According to economist Stepan Krecek, adviser to Fiala, discussions with the energy magnates are at an advanced stage. “It’s complicated, a lot of things can still change. The key point is the capping of electricity prices so that the end customer pays between 6 and 10 CZK (0.24 and 0.41 €) per kilowatt hour,” said Krecek, quoted by Seznam Zpravy Last week. CEZ ally and governor of South Bohemia, Martin Kuba, welcomed the approach, saying that “finally, all the important players are in play”.

On Friday, EU energy ministers were divided over proposals to cap prices on Russian gas imports, pushing the idea back to the European Commission.

Czech officials did not support the European Commission’s proposal to cap Russian gas import prices only at the Brussels meeting, preferring a cap on all gas imports. The Slovak and Hungarian energy ministers also opposed the idea, which they feared would cause Russia to end its exports and thus lead to shortages before winter due to heavy dependence on their countries vis-à-vis Russian imports. Russia’s gas import cap measure was called absurd by Hungarian Foreign Minister Peter Szijjarto at the EU energy meeting.