The Czech government on Wednesday approved revenue caps for power companies to finance measures to ease the burden of high prices on households and businesses, Reuters and Agerpres reported.

The income cap for power producers will be added to a windfall tax levied by energy companies and the biggest banks to raise at least 100 billion kroner ($4.12 billion) for the budget next year.

These amounts will go to finance compensation programs for electricity consumers who have suffered from price increases following the Russian invasion of Ukraine.

The ceiling will bring revenues to the budget next year by “tens of billions of crowns”, which exceeds previous estimates, the Czech industry minister said on Wednesday.

The government in Prague has rejected criticism that its measures amount to double taxation and go beyond measures agreed at the European level.

However, these limits, which start at €70 per MWh of electricity produced in nuclear power plants, will require parliamentary approval and reach €240 per MWh of electricity produced in plants fueled by biomass gas. .

The Czech state will collect 90% of the revenues generated by electricity producers above the ceiling.

The Czech government wants the measure to limit the income of electricity companies to be in effect until the end of 2023

The authorities said the restrictions would also apply to power generation based on previous contracts in the past, in response to the fact that Czech power producers such as the CEZ group have already sold most of the electricity they will produce. in 2023.

The price cap in the Czech Republic is based on an agreement agreed at the level of the European Union, which limits the income of electricity producers to 180 euros per megawatt hour, an agreement that allows member states to change this figure for each station depending on the type of fuel they use

Finance Minister Zbynek Stanjura estimated that although the revenue cap will allow the state to collect more than the 15 billion crowns originally planned in the budget, it will also reduce the profits of companies, so the government will collect a smaller amount from the tax on extraordinary profits, which has already been approved by the lower house of parliament.

The total amount collected as a result of the two events may exceed 100 billion crowns, Zbynek Stanjura estimated.

The Prague government’s proposal to limit the income of electricity producers goes beyond the agreement agreed at the EU level, assuming that the measure will enter into force on December 1 this year and will be extended until the end of 2023, while the EU agreement will only be valid until June 30, 2023.

The decision of the government in Prague was made only a day after the Ministry of Industry published a proposal in this regard.