(Bloomberg) -- Germany’s top court rejected a suit targeting a levy that harvested part of the huge profits renewable-energy producers made after Russia’s full-scale invasion of Ukraine.
The Federal Constitutional Court backed Germany’s so-called “power-price brake” in a ruling issued in Karlsruhe on Thursday. Operators of power plants running on renewables had reaped revenues “far in excess of typical investment expectations,” while consumers were “subject to an exceptionally heavy burden,” the judges said in an emailed statement.
“In this exceptional situation, the redistribution of the so-called surplus revenues achieved creates an appropriate balance between the favored electricity producers and the burdened electricity consumers,” they added.
The suit targeted a levy which renewable energy producers had to pay to grid operators in 2023, when the price-brake mechanism was activated after the energy crisis caused power prices to skyrocket.
Proceeds from the windfall tax were used to help finance government support for households and businesses to ease the burden from higher power bills.
The suit was filed by 22 power producers – including operators of photovoltaic, biomass and wind power plants – who argued the levy was unconstitutional and that the government burdened them with a task society as a whole should shoulder.
In a worst case scenario, the government could have been forced to reimburse as much as €800 million ($843 million), the Frankfurter Allgemeine Zeitung newspaper reported Thursday, citing Philipp Steinberg, a senior Economy Ministry official.
Officials in Berlin argued that the tool was a legitimate response to the price increases and that the levy went directly to the consumer.
--With assistance from Laura Malsch, Kamil Kowalcze, Eva Brendel and Christoph Rauwald.
(Updates with details from court statement starting in second paragraph.)
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