Czech Power Price Cap Proposal Ranges Up to 230 Euros/MWh

The Czech Industry Ministry has proposed revenue caps on wholesale power prices ranging from 70 to 230 euros per megawatt hour, depending on the source, a legislative document shows.

The ceilings are based on the European Union’s agreement to take revenue from electricity producers exceeding 180 euros per megawatt hour to fund national schemes compensating customers for soaring power prices after Russia’s invasion of Ukraine.

Member states can move the general ceiling in both directions depending on the type of power plants and their running and investment costs.

The revenue cap is expected to raise more than 117 billion euros across the EU, while the Czech Finance Ministry has estimated it would raise 15 billion crowns for the Czech budget next year.

The Czechs opted to take 90% of the excessive revenue rather than the full 100% allowed by the EU regulation, which the industry ministry said was to keep producers motivated to supply at times of high demand.

The proposal lowers the general 180 euro/MWh cap, above which the revenue will be taken by the state, to 70 euros for the country’s nuclear power plants, which are operated by state-owned utility CEZ.

The ceiling for renewable sources will be at 180 euros. For smaller lignite-fired plants with output up to 140 megawatts, it will be 170 euros, while the ceiling for large coal plants will be 230 euros.

For biomass power plants the ceilings are 200 and 230 euros, depending on the type of fuel.

The draft legislation proposes to keep the price cap in place from Dec. 1 until the end of 2023, half a year longer than the EU regulation.

The ministry plans to discuss the bill in a fast-track procedure to meet the scheme’s intended Dec. 1 launch.

Separately, the lower house of parliament on Friday approved a windfall tax on electricity producers and traders as well as other energy sector businesses and banks, proceeds of which will also fund energy burden measures.