Economy

Greece: Energy companies must give up 90 percent of their extra profits to cover electricity costs for citizens

Greece: Energy companies must give up 90 percent of their extra profits to cover electricity costs for citizens

Energy and power companies are among the biggest beneficiaries of the current crisis. Bills are skyrocketing for the population, while energy suppliers are making billions in profits. In Greece, energy companies must now pay 90 percent of their excessive crisis profits to the state. The conservative government wants to use this to finance a cost-of-living adjustment and to cover 60 percent of the additional electricity costs for citizens.

Across Europe, electricity and gas prices are skyrocketing – this is a massive burden for large sections of the population. In Greece, too, energy bills have risen sharply in recent months. Since the financial and economic crisis, many people are finding it difficult to make ends meet, with one in three living on the edge of poverty. In view of the inflation, the conservative government must relieve the burden on the population. Citizens are now to be reimbursed up to 600 euros for increased electricity bills. This means that the state will cover 60 percent of the increased electricity costs. People with an annual income of up to 45,000 euros are eligible. In addition, energy-saving air conditioners, refrigerators and other appliances are to be subsidized.

90 percent of the crisis profits of energy companies in Greece

The 2.5-billion-euro program is to be financed by a special tax on the extra profits of energy companies. Profits above the average values of the previous year will be skimmed off with a 90 percent tax. In a televised address on the relief package, Prime Minister Kyriakos Mitsotakis said:

“Electricity companies should be taxed more if their profits are much higher than the previous year.”

In addition, he said, the government was working on decoupling energy prices from people’s electricity bills. The prime minister had already called for this measure at EU level at the beginning of April. Spain and Portugal are also in favour of decoupling; they have now at least pushed through a price cap on electricity prices in the EU. Yet the conservative ruling party Nea Dimokratia has a neoliberal orientation, having cut taxes on corporate profits and real estate in the past. Moreover, within the party, Prime Minister Mitsotakis tends to belong to the liberal economic wing.

Electricity suppliers cut off power to 26,000 households

In late April, Greek electricity providers began cutting off power to more than 26,000 households because they could no longer pay the bills. This has increased pressure on the government. As early as August 2021, the conservative government provided subsidies to poorer households for their electricity bills, which were increased again in the fall. The heating subsidy is now available to 1 million households – 300,000 more than last year. In addition, there is a subsidy of 42 euros per month for everyone’s electricity bill. For people living in social housing, this subsidy is even higher, amounting to 180 euros per megawatt hour. But because these measures did not provide sufficient relief for the population, the government is now adopting this relief package.

Italy also taxes excess profits of energy companies

Italy wants to skim off the excessive profits of energy companies with a special tax in order to relieve the population. The country also has a conservative as the head of government: former ECB chief Mario Draghi. Companies are to pay 25 percent of their additional profits. Central to the calculation are the additional profits of the last six months compared to the same period last year. Among others, 28 million Italians are to benefit from this. They are to receive 200 euros to compensate for their increased energy costs.

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