The Engie group has estimated that the amount of the new European solidarity contribution on the profits of energy groups would have an impact of 1.2 to 1.5 billion euros on its operating income in 2023, according to a statement.
“It goes without saying that our forecasts for 2022 are confirmed,” Pierre-François Riolacci, Engie’s deputy chief executive officer for finance, CSR and procurement, said on a conference call, as the group’s stock fell about 5% after the Paris stock exchange opened.
Engie also indicates that it “reserves the right to challenge taxes that, in its opinion, do not respect the existing legal framework and introduce unjustified discrimination between operators or technologies, particularly in Belgium and Italy”.
The group recalls that in October, the Council of the European Union adopted “a regulation on an emergency intervention to address the rise in energy prices”, through the application of a “cap on revenues from the production of electricity using technologies” called “inframarginal”.
These measures are to be implemented in all Member States from 1 December 2022 to 30 June 2023, and will be “potentially extended”. It specifies that transcription procedures are underway in each country, with “significant adjustments to the EU mechanism, particularly in terms of duration, scope, ceiling amount and method of calculating revenue”.
“The main impacts for Engie are expected to occur in Belgium, France and Italy, in addition to the already existing extraordinary contribution enacted before the adoption of the EU regulation,” the statement said.
While the parliaments in Belgium and France – the two European countries where Engie produces the most electricity – have now adopted these measures into their domestic law, the group estimates that they will have an impact on its operating profit (Ebit) “of between €0.7 and €0.9 billion in 2022 and between €1.2 and €1.5 billion in 2023, with the bulk of the annual increase related to the nuclear activities in France and Belgium”. “The impact on recurring net income, group share, is estimated at between €0.8 billion and €1.0 billion in 2022 and €1.1 billion and €1.4 billion in 2023″, it added.
In France, Engie points out that the 2023 finance law “provides for a revenue cap over an eighteen-month period, from July 1, 2022 to December 31, 2023″, and that the amount of the cap varies between €40 per MWh and €175 per MWh, depending on the power generation technology used.
“Excess revenues are taxed at a rate of 90%. The Engie group is mainly impacted for its drawing rights on two EDF nuclear power plants”, Chooz B and Tricastin, its gas-fired power plants as well as its cogeneration plants, while its renewable assets “will be less impacted, either due to existing royalties for hydroelectric power plants, or due to the application of a regulated price mechanism”, it is specified.
In Belgium, the revenue cap “is implemented retroactively, from August 1, 2022 to June 30, 2023″, and Engie’s nuclear assets, owned and operated by its subsidiary Electrabel, “fall within the scope” of the measures.
