Greece to Impose One-Off Windfall Tax on Gas Power Producers

Greece plans to tax its natural gas-fired power producers with a one-off windfall tax in August and September to raise funds to subsidize electricity bills as wholesale power prices spiked this summer.

Power demand in Greece has soared amid heat waves in recent weeks, leading to a jump in wholesale electricity prices, which have been weighing on consumer bills. Due to the interconnected power grids in countries in Europe, rising power demand in neighboring countries has also lifted wholesale prices in Greece.

“Therefore the government has decided to impose a one-off levy on gas-fired power producers and use the proceeds to be able to alleviate electricity bills in August,” Greece’s Prime Minister Kyriakos Mitsotakis was quoted as saying in an interview with broadcaster Skai TV.

Greece will have to cope with “a temporary distortion of the European regional European electricity market,” Mitsotakis added.

To smooth out this distortion in the regional power market, Greece will have a one-off tax on gas-fired power producers in the next two months.

The funds will be used to subsidize part of the August household bills because the current wholesale prices point to the fact that consumers are set to “see a sharp increase in electricity prices” next month, the prime minister said.

Power consumption in Greece peaks in July and August as households crank up air conditioning in high temperatures. This summer, Greece has seen a constant heat wave with temperatures topping 40 degrees Celsius (104 F).

Across the EU, the average monthly wholesale day-ahead prices jumped in June compared to May, according to data from energy think tank Ember. Greece saw one of the biggest monthly increases in day-ahead power prices in June compared to the previous month.

Electricity prices are set to rise in Europe by the end of the year, judging by the forward curve, Andriy Tarasenko, chief analyst at GMK Center, said last week, commenting on the jump in power prices so far this summer.

By Charles Kennedy for Oilprice.com

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