Electricity / They are cutting returns from super profits – “Gift” millions of euros

Even lower than the initial estimates of the authorities, it seems that the 17-month surplus profits of the electricity companies (and) in the supply will ultimately be, reaffirming the well-known practice of reducing the amounts that will eventually be returned by the obligated companies, which was also the case in the case of power generation and to some extent also in taxing the record profits of the refineries.

The latest leaks speak of a total amount of 258 million euros for the period from August 2022 to December 2023, i.e. during the entire period of suspension of the readjustment clause and subsidies. In the spring, in fact, the estimates placed the relative amount lower, at 250 million euros, while a few months back there was talk of an amount that would slightly exceed 200 million.

Too little, too late

We remind you that the initial forecasts of December 2022 brought the surplus profits for the August-October quarter to 390 million. It is noted that at that time SYRIZA-P.S. estimated the surplus profits at around 1 billion only for the two months of September-October 2022.

New estimates for the period followed August-December 2022, which placed the amount of excess profits to be returned between 300 and 500 million euros.

The amount circulating today that will be the final one, i.e. 258 million, is significantly lower by almost half compared to the initial forecasts of the first 5-month implementation and in fact now concerns the entire 17-month period.

It is worth mentioning that the push for the imposition of a “temporary partial revenue return mechanism” by electricity suppliers arose only three months after the implementation of the new regime, as it was found that nominal low-voltage (domestic) retail tariffs were more than double or even triple at least in relation to the next day market clearing price (MTP) (wholesale) each month. A typical example was a household tariff for October 2022 announced by the supplier with retail at 595-607 euros/MWh, while the TEA of the month was closed at 232.6 euros/MWh (+156%-161% difference!).

It took more than a year and a half for the authorities to arrive at this number, given that the first half of 2024 closes and the mechanism has been institutionalized since November 2022, while the Joint Ministerial Decision necessary for its activation was signed at the end of October 2023.

In fact, the final amount that will be determined in the next period is expected to be directed towards covering part of the debts of the Municipal Water Supply and Sewerage Enterprises (DEWA) to PPC, i.e. to a large extent it will be returned, as it is alleged that the lion’s share of the surplus profits comes from PPC.

History repeats itself

However, from the beginning through the institutionalization of the mechanism and the determination of surplus income it was obvious that there would be «clipping» in favor of suppliers –as was also done with the super profits in power generation- as almost everything has been included as costs borne by the suppliers. Thus, the calculations include everything from “reasonable” costs, discounts-fixed retail tariffs, warranties to tax benefits.

Aafter all, it was obvious that most of the “arguments” of the suppliers were heard, who had, of course, reacted to the imposition of an extraordinary levy, having “warned” of de facto increased tariffs due to high insurancefuel tank (risk premium) that they had to pay as part of the hedge, as well as other costs (covering increased financial liquidity needs, actual supply costs weighing discounts, etc., bad debts due to overdue debts and universal service).

We remind you that the taxation of the “surplus revenues” in power generation (of the four vertically integrated players) also went through 40 waves, which finally reached the coffers in pieces. From her data RAE for increased total profits in the six months October 2021-March 2022, amounting to 927.44 million euros, we reached an amount less than half of what was initially calculated and finally at 344 million.

It is noted that the report of the Environment and Energy Sector SYRIZA-P.S. spoke of overall surplus profits in the 12 months July 2021-June 2022 of producers, importers of electricity and importers of natural gas amounting to 2.2 billion euros and 1.7 billion in the nine months July 2021-March 2022.

By the same logic, approximately 200 million are “missing” from the income of the temporary solidarity contribution of the two refining companies (EL.PE. and Motor Oil) based on record profits of nearly 3 billion in total in 2022. The amount finally confirmed is 629.89 million, while the market estimated it would be 866 million, where it is also reduced in relation to the calculations of the companies themselves, as cumulatively it amounted to 662.138 million.

Besides, the possibility of extending the extraordinary contribution to the refining sector for the year 2023, in the taxation of the particularly high profits of 2021 of DEPA Emporia is also up in the air, while RAE’s estimate for a return from the power producers of 67 million collected during the period was left blank November 2020-February 2021.