Stefan Schulmeister on victory: “An expression of market religiosity

Extraordinarily excessive vitality costs for Austrian households, windfall income for Verbund and OMV. To the economist Stefan Schulmeister, that is absurd. He suggests methods to restructure the vitality market, what ought to occur at a revenue margin, and the way customers can higher expose rising costs at supermarkets and gasoline stations.

MOMENT: Power sector firms like Verbund and OMV are actually making big income. Ought to such extra income be withdrawn or taxed individually?

college instructor: It will be higher to not enable these income to come up within the first place. As a result of as quickly as they come up, very advanced redistribution processes should be launched. For instance, obligatory taxation or marginal costs.

MOMENT: However Verbund and OMV have already made windfall income. Should not there be a levy, an extra tax, or a particular dividend to intervene?

college instructor: You will need to do it. Nonetheless, interfering with the very advanced tax legal guidelines for firms over the present windfall income is slightly problematic. Mario Draghi proposed the neatest resolution for Italy: a one-time giant tax. Nonetheless, it doesn’t begin with revenue, however with extra gross sales. The problematic dedication of how rather more revenue the corporate made will not be taken into consideration.

It merely determines what the vitality producers have finished when it comes to extra gross sales. These extra gross sales are clearly associated to the value of electrical energy. As a result of the demand for electrical energy is understood and doesn’t fluctuate a lot. So you would say: we’re taking 80 p.c of the incremental gross sales made by vitality suppliers over time beginning in 2020. This is able to carry tens of billions and wouldn’t confuse the complete tax system.

MOMENT: Find out how to stop vitality firms from making such tremendous income throughout a disaster?

college instructor: The issue with electrical energy suppliers is that the value of electrical energy is decided by the most costly plant that’s nonetheless wanted to generate the required quantity of electrical energy. In Austria, this results in the grotesque scenario the place solely 13 p.c of electrical energy comes from gas-fired energy crops – but their extraordinarily excessive value now determines the general value of electrical energy. Verbund produces electrical energy at hydroelectric energy crops at a price of 5 cents per kilowatt hour. If the struggle in Ukraine continues and the value of electrical energy continues to rise, he might quickly be incomes 50 cents per kilowatt-hour because of the excessive value on the change.

Austria has constructed so many hydroelectric crops in 5 a long time. They cowl 70 p.c of the electrical energy demand. The Austrian inhabitants ought to be capable of profit from this low price manufacturing.

I might begin with this pricing sample and the truth that this value is decided by the most costly energy plant on the change. With price. Every electrical energy provider is obliged to set its costs in accordance with the precise prices of its manufacturing. In precept, that is the rule in Switzerland. This has the benefit that it doesn’t disable pricing on exchanges. However the market value is now not so vital. It must be paid provided that electrical energy should be bought in a short while to provide the inhabitants.

MOMENT: To be efficient, this Swiss mannequin should be launched shortly. This is able to imply an entire restructuring of the electrical energy market. Is it potential in a short while? And might Austria do it alone?

college instructor: I do not suppose that is towards EU legislation. The EU has now given states extra leeway in how they set their vitality tariffs. Instance: Viktor Orban sponsored gasoline costs, however just for Hungarians. I did not hear that he was going to face a trespass case for that. The fundamental precept is straightforward: Austrian electrical energy suppliers, that are additionally largely state-owned, are obliged to provide Austrian customers within the first place on the precise price value. We all know how excessive they’re for particular person applied sciences. In the course of the transition part, you possibly can calculate a separate electrical energy value ceiling for every provider that may cowl their precise prices.

The benefit over different proposals is that the state will not be so closely burdened financially. The concept that everybody will get a quota of electrical energy at a sponsored value and something in extra of that should be paid on the market value implies that the state should compensate all electrical energy suppliers for the distinction between the sponsored value and the market value. . In my view, that is unacceptable.

MOMENT: So now you are demanding quick motion like a particular levy in Italy? Or ought to we shortly transfer away from the precept of orderliness and transfer in direction of an actual price value of electrical energy, just like the Swiss mannequin?

college instructor: One doesn’t exclude the opposite. Power is not only good. It’s essential for survival, it impacts all sectors of the economic system. It has a particularly vital social element. No one can survive with out vitality. This is applicable to each households and firms. As well as, there may be an environmental element with a local weather disaster approaching us. To me that the value of such a commodity is decided by the inventory exchanges is a grotesque expression of exaggerated market religiosity.

In the midst of the neoliberal euphoria of latest a long time, a perception has arisen that the market does every little thing higher. However particular market situations weren’t taken into consideration. In an surroundings of energy technology and energy demand, the place each should at all times be the identical or the grid will collapse, pricing on exchanges is one thing particularly pointless. We have to return to a form of pragmatic widespread sense.

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