* Cabinet plans to impose 26 pct tax on large solar plants
* To tax CO2 credits allocated to power plants in 2011, 2012
* To auction CO2 credits after 2013
* Power group CEZ <> shares fall after announcement
(Adds analyst, CEZ shares, details)
By Jan Korselt and Roman Gazdik
PRAGUE, Oct 20 (Reuters) - The Czech government moved to
counter the threat of soaring electricity prices caused by a
solar energy boom on Wednesday with new taxes that will limit
the price rise to 5.5 percent next year.
Generous tariffs that obliged distributors to buy solar
power at a higher price was expected to lift electricity prices
as much as 20 percent next year after subsidies prompted
investors to pile money into solar plants.
But the investment boom risked overloading the grid, while
spiking prices could hit the fragile economic recovery.
The government approved a 26 percent tax on solar plants
larger than 30 kilowatts installed capacity and connected to
the grid in 2009 and 2010, and imposed a windfall tax on CO2
credits allocated to electricity producers in 2011 and 2012.
Prime Minister Petr Necas said the measures should bring
government coffers 4.2 billion crowns and 4.8 billion crowns,
respectively. The money would then be used to compensate
distributors for paying feed-in tariffs to solar plants.
"For end customers, for both households and for the
industrial sphere, the (electricity) price hike will be a
maximum of 5.5 percent next year," Necas said.
High feed-in tariffs, guaranteed by the government for 20
years, helped the central European state become the third
biggest solar nation in Europe in terms of new capacity.
CORRECTING A WRONG
Analysts said the taxes were 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 --
adding the move was not like a windfall tax on utilities in
Hungary that the government is using to plug budget holes.
The Czech measures, especially the tax on CO2 credit, will
hurt majority state-owned power group CEZ <>, the
country's biggest power producer whose shares dropped to a 1-1/2
year low this month. Shares on Wednesday fell more than 1
percent to 775 percent after the tax announcement.
Ceska Sporitelna analyst Petr Bartek said the tax for 2011
and 2012 knocks 12 crowns per share off CEZ, but added the
government may be over-pricing the costs of the solar subsidies.
"Emission allowances are obviously the easiest target, also
because they will not have to give 30 percent to minority
shareholders," Bartek said, referring to dividend payments.
"Unfortunately, it comes at a time, when CEZ needs to invest
a lot, so it is not an especially favourable situation."
Necas said another source of money in coming years should
come from auctioning CO2 credits in the years 2013-2020, instead
of giving them to electricity companies for free as originally
planned.
The value of these credits is estimated at some 40 billion
crowns and buying them instead of receiving them for free could
mean an extra cost of more than 30 billion crowns for CEZ.
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.
(Writing by Jana Mlcochova and Jason Hovet)
