Energy companies in Slovenia will have to pay a special tax on windfall profits under legislation passed on 9 December that plans to channel such revenue towards the promotion of renewable energy sources and price subsidies.

Under the law, any revenue in excess of EUR 180 per MWh of electricity produced in Slovenia and sold on the wholesale market will be channelled into the national budget.

Producers whose production costs exceed EUR 180 per MWh will be exempted, as will electricity produced using natural gas and small installations.

A special thresold, of €230 per MWh, has been set for electricity produced with lignite, which is only used at the Šoštanj coal-fired power station.

Companies that produce and process crude oil and natural gas in Slovenia will be liable for a "solidarity charge" on any profits that exceed the average of net profits in the last three years by 20%.

The government has not provided an estimate of how much revenue it expects but given the current performance of the largest energy firms in the country, the majority of which are state owned, it seems unlikely that the tax will produce much revenue.

Petrol, the largest oil company, saw net profit decline by 74% in the first nine months of the year to €24 million as a result of fuel price administration.

HSE, the largest power producer, was just bailed out by the state after saying it was expecting to lose more than €400 million this year due to lower-than-expected production of its hydro division and coal supply problems in Šoštanj.

The tax is attached to a series of measures designed to reduce demand at peak times by at least 5% during winter.

The effort would be led by Eles, the transmission system operator, in collaboration with electricity traders, suppliers and individual large electricity consumers.

Such users would pay a lower network fee if they reduce consumption at critical times by at least 5% and shift consumption to off-peak times.

Some of the windfall would also be used to promote the expansion of renewable sources including green hydrogen and biogas produced from waste, and energy and heat storage.

The legislation also provides the legal basis for a compensation scheme for providers which must currently sell electricity at regulated prices.