The government has decided to cap all market revenues of non-gas power generators. This will collect additional revenue and use it to help power consumers. The market revenue cap will be set at €120 per MWh for wind and solar, and at least €180 per MWh for generation from oil and coal.
Where electricity suppliers can demonstrate that revenue in excess of the cap is passed on to consumers through lower prices, that revenue will not be subject to the cap. This cap, market revenue cap, will run from December 2022 to June 2023.
The government also decided to implement a temporary aid scheme specified in the European Council Regulation for companies active in fossil fuel production and refining in 2022 and 2023. This temporary scheme is calculated based on a company's taxable profit, which is 20% higher than the baseline. The basis here will be the company's average taxable profit for the period 2018 to 2021. Taxable profits in excess of 20% above the baseline are subject to a temporary solidarity contribution at the rate of 75%.
Given the volatility of gas prices, the level and contribution of revenue from market revenue margins cannot be estimated with any certainty. Depending on the price level of natural gas, revenues could range from around €300 million to €1.9 billion. However, the level is expected to be at the low end of the range and could be even lower if gas prices fall, Minister Eamonn Ryan said.
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