News item | 11-30-2022 | 12:00
In order to dampen the high energy bills, the European Commission decided on 6 October to temporarily levy the high additional profits of electricity producers as a result of the exceptionally high energy prices. This money will be invested in making energy bills more affordable for households and businesses. For the Netherlands, this finances part of the price ceiling. This so-called ‘inframarginal levy’ obliges European member states to cap the revenues of electricity producers for 7 months from 1 December. The revenue from the levy is estimated at € 1.8 billion, but the amount strongly depends on the development of the electricity price in that period.
Minister Rob Jetten: “This levy was devised with the European member states in order to partially finance the reduction of energy bills. Due to the rapid drafting of the European regulation and the date on which the levy will come into effect, a great deal has to be arranged in a short period of time. That is why I choose to introduce the levy with retroactive effect.”
State Secretary Marnix van Rij (Tax and Customs Administration): “We have recently been looking for the most efficient way to introduce this inframarginal tax. This collaboration between the Dutch Emissions Authority, the Tax and Customs Administration and ACM is the result of that. The proceeds contribute to making energy bills more affordable for citizens and businesses.”
Ceiling
The Netherlands sets the ceiling at €130 per MWh, with the exception of projects with a subsidy that is above, for which the amount of the subsidy applies. The levy applies to producers with a production capacity of 1 MW or more. This corresponds to approximately 3,000 solar panels or one large wind turbine. It is expected that some 1,500 production installations will be subject to the levy. At the time of the planned investments, the market price was between €40 and €70 MWh, which means that with a ceiling of €130 MWh, a good profit margin can still be achieved for the electricity producers.
The levy will take effect on 1 December 2022. Because this mandatory ceiling is not in line with existing legislation, a proposal for an independent implementation law is being prepared. This means that when the law is completed, the law must work back to December 1, 2022. It is expected that a proposal for the law will be submitted to the House of Representatives in the spring of 2023. The legislative proposal will be further elaborated in the near future and we will continue to talk to industry organizations to achieve the best possible implementation of this levy. We take into account the continuously changing circumstances and the limited time frame for implementation.
Biomass and coal-fired power stations
Due to the higher biomass prices, a ceiling of €240 per MWh applies to electricity generation from biomass. And a flexible ceiling applies to coal-fired power plants. As long as coal and ETS prices are low, the ceiling is equal to the levy for all electricity producers. However, when the costs for coal and ETS prices are high, the ceiling for coal plants is higher. In this way we prevent the coal-fired power stations from stopping production as a result of this temporary levy. This would be at odds with the recent decision to withdraw production restrictions.
Performance
The Dutch Emissions Authority (NEa) and the Tax and Customs Administration will jointly implement the levy, with ACM playing an advisory role. The NEa is responsible for the substantive part and for supervision and checks whether all parties have filed a report. The tax authorities are responsible for collecting the money. The levy will be paid via declaration. This means that the parties themselves must calculate whether and, if so, how much tax they owe.