On November 24, 2022 the Senate approved the draft amendment to the Energy Act introducing a 90% levy on excessive revenues for electricity producers with effect as of December 1, 2022. The amendment refers to the cap as excessive revenue once it has been passed and sets it at different amounts for different types of energy:

• for wind energy 180 eur,
• for solar energy 180 eur,
• for geothermal energy 180 eur,
• for hydro energy not using a reservoir 180 eur,
• for gas biomass 240 eur,
• for solid biomass 210 eur,
• for waste used for energy other than biomass 100 eur,
• for nuclear energy 70 eur,
• for brown coal in the case of electricity generated in a power plant with installed capacity of the largest production source in the power plant up to 140 MW incl. 230 eur, over 140 MW 170 eur,
• for mineral oils 180 eur,
• for peat 180 eur.

The levy on excessive revenues amounts to 90% of the excessive revenue calculated in Czech currency. The first levy period is December 2022. Producers are required to make the prepayments on the levy by the 25th day after the prepayment period. This means that the prepayments on the levy for December 2022 must be paid by January 25, 2023.

According to the Bill, the levy will exclude excessive revenues from the sale of electricity generated:

• in power plants with an installed electrical capacity of up to and including 1 MW,
• using promoted energy sources with registered promotion according to the legislation regulating promoted energy sources in the form of:

• • feed-in tariff,
  • auction bonus, or
  • green bonus for electricity in an hourly regime at a source launched or modernized since January 1, 2022,

• in a pumped hydroelectric power plant or hydroelectric power plant using hydro energy with registered promotion for electricity under the act regulating promoted power sources, stipulating peak or semipeak operation in the license to handle water or other decision, or
• from biomethane.

As we have already informed you, the proposed wording in Section 94 gives rise to certain doubts over whether the levy excludes the amount of the green bonus the producer receives from OTE and if the levy only applies to the amount received from the electricity trader for electricity purchase or if it applies to the entire revenue for electricity sales, i.e. both the green bonus from OTE and from the electricity trader.

While the second possibility would run counter to the meaning and purpose of the regulation and producers would have the opportunity to defend themselves in court against a potential decrease in their revenue from the promotion in the form of a green bonus, it is certain that a decrease in revenue for producers using the green bonus would have a highly unpleasant impact on their cash flow, even if it was later determined to be in conflict with the regulation.

Although we continue to hold the opinion that the wording of the amendment (as passed by the Senate) is confusing and open to interpretations that represent a risk for producers who have chosen the green bonus (and we have contacted some members of the professional public who agree), after analysing the explanatory report, method of settling objections during the commenting procedure, and discussing with the aforementioned experts, we are of the opinion that the risk that the state might apply the levy to the green bonus may not necessarily come to pass. It is still important to keep in mind, however, that the limit on income will apply at the very least to income for supplying electricity to the supplier.

The act was delivered to the Czech President on November 25, 2022 and is now waiting for his signature.