* Cabinet plans to impose 26 pct tax on solar plants
* To tax CO2 credits allocated in 2011,2012 to power plants
* To auction CO2 credits after 2013
(Adds details, background)
PRAGUE, Oct 20 (Reuters) - The Czech government has approved
measures to limit a rise in 2011 power prices for both companies
and households to a maximum of 5.5 percent, Czech Prime Minister
Petr Necas said on Wednesday.
The government has been under pressure amid a regional and
senate elections the past and the next weekend, to produce a
plan to prevent an electricity price hike caused by an overly
generous solar subsidies introduced by the previous political
administration.
The high feed-in tariffs, guaranteed by the government, made
power production from solar plants a highly profitable business
and the Czech Republic, a country of 10.5 million people, was
the third-biggest solar nation in Europe last year in terms of
new installed capacity.
"For end customers, for both households and for the
industrial sphere, the price hike will be a maximum of 5.5
percent next year," Necas said.
Curbing the price hike was possible thanks to simultaneously
implementing several measures, including a 26 percent tax on
solar plants connected to the grid in 2009 and 2010.
This is expected to bring to the state coffers some 4.2
billion crowns, Necas said.
The government also agreed to impose a windfall tax on CO2
credit allocated to electricity producers only, in years 2011
and 2012. This is expected to earn the state 4.8 billion crowns,
Necas said.
Unlike windfall taxes on utilities and other sectors in
Hungary, meant to help plug holes in budget revenues, analysts
said this tax was meant to rectify a policy in which subsidies
granted to solar power producers had grown too large after a
steep fall in the price of solar power cells.
The government will decide about the tax rate later,
depending on how many companies will be affected by this, he
said.
Another source of money to limit power price increases in
coming years should come from auctioning CO2 credits in the
years 2013-2020, instead of giving them companies for free as
originally planned, the prime minister added.
The value of these credits is estimated at some 40 billion
Czech crowns and buying them instead of receiving them for free
will mean an extra cost of more than 30 billion crowns for
majority state-owned power group CEZ <>, negatively
affecting its profitability.
CEZ profitability is key to the government which plans to
use CEZ dividend as a cushion for partially privatising the
country's overly redistributive pension system.
(Reporting by Jan Korselt and Roman Gazdik; writing by Jana
Mlcochova; editing by Michael Winfrey)
