German FAZ: Federal Constitutional Court is negotiating profit skimming from electricity producers 007755

The skimming of so-called chance profits to help finance the electricity price brake only lasted a few months: from December 2022 to June 2023. But the traffic light coalition’s measure, which was intended to help deal with the energy crisis after the Russian attack on Ukraine, has legal consequences. This Tuesday, the First Senate of the Federal Constitutional Court will hear the constitutional complaints from almost two dozen operators of solar, wind and biomass plants. The companies complain that the levy amounts were an inadmissible “parafiscal special levy” that violated their fundamental rights. “The levy on windfall profits is only fair,” argued Federal Economics Minister Robert Habeck (Greens) at the time. After all, the system operators made “an incredible amount of money” during the crisis. “Using this money for a solidarity-based contribution to the common good and putting it into reducing electricity prices and curbing network fees is exactly the right thing,” emphasized the Minister of Economic Affairs. Absorption of 90 percent Since December 2022, the federal government has been skimming off “surplus revenues” from electricity producers . 90 percent of the revenue that exceeded a certain limit had to be paid to the network operators in order to then use the money for state energy price support. In particular, operators of renewable energy systems could have sold their electricity during the energy crisis at prices well above the production costs, which green electricity producers could not have expected, the Ministry of Economic Affairs justified the skimming. Determined according to the “merit order” principle, roughly speaking , the most expensive energy source necessary to cover electricity demand, the price on the electricity exchange. With the war-related increase in gas prices, electricity prices in this country also rose significantly. Green electricity producers in particular benefited from the high stock market prices. In 2022, producers of renewable electricity alone would have pocketed around 18 billion euros in such “random profits,” the Ministry of Economic Affairs announced at the time. But the expectation of skimming off a double-digit billion amount was not fulfilled. By the end of June 2023 it was only around 521 million euros, according to a request from the Left parliamentary group in the Bundestag. The traffic light then no longer extended the levy because the markets had calmed down again. Green electricity producers nevertheless went to the Federal Constitutional Court. It is a question of fundamental constitutional law. The skimming of proceeds is a serious political mistake that should not be repeated. At the heart of the constitutional complaint is the accusation that the skimming rules are constitutionally inadmissible. Special levies as “rare exceptions” The traffic light coalition designed the revenue skimming as a special levy without the strict requirements for it being met. According to Karlsruhe case law, special levies must remain “rare exceptions” “because the person liable to pay the tax is also regularly a taxpayer and as such is used to finance community burdens while maintaining tax fairness and uniformity of taxation,” says the constitutional complaint, which was submitted to the F.A.Z. This means that a special levy must serve a purpose other than just obtaining financial resources for the state. However, the skimming of the “surplus revenues” only serves to co-finance state energy aid, without the green electricity producers having any special financing responsibility. “There is no obligation for electricity producers to keep prices low,” emphasize the complainants. Rather, this is a task for society as a whole, which must therefore be financed from tax revenues. In any case, the high electricity costs due to the war-related increase in gas prices were primarily caused by the gas power plants, which, however, were exempt from the skimming. Criticism of the concept of fictitious revenues Another point of criticism is the specific design of the skimming mechanism. The “surplus revenues” to be transferred are “completely decoupled” from the financial resources the state actually has to raise in order to relieve households and companies from the high energy costs. In the event that the skimmed proceeds exceeded the cost of the electricity price caps, there is no provision for reimbursement, but rather the transmission system operators are then allowed to offset the amounts against their network costs. More on the subject In the opinion of the green electricity producers, the approach of fictitious revenue that the Legislators voted for the levy. The concept is not compatible with the principle of performance. Rather, the revenue in excess of normal business operations must actually have occurred. Because of the approach of fictitious redeemers when electricity prices are high, electricity producers with certain marketing contracts are threatened with levy amounts that “go far beyond their income and therefore endanger the substance of the company,” the green electricity producers complain.
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