TEXT
How the EU’s scheme to skim off 140 billion Euros from the energy companies’ profit will work.
Since Russia’s invasion of Ukraine, and its subsequent cuts of oil and gas export to Europe, energy prices there have skyrocketed. The situation is exacerbated by the shortfalls in nuclear – power generation, because many nuclear reactors are shut-down for maintenance.
Some energy companies, such as solar, wind and nuclear power companies, will make hefty “windfall” profits from this price increase, because their costs do not depend on the price of fossil fuels, but their selling prices will benefit from the general increases.
The European Union is considering forcing these companies to “share” their profit with the population. It is proposing to define a profit “benchmark”. A third of the profit that exceeds 120% of that benchmark will have to be paid to the government. In addition, the EU is proposing to cap the revenues that energy firm can receive at 180 Euros per megawatt hour. Revenues above that cap will be collected by the grid operators to be redistributed to households, possibly as a direct handout.
FINANCIAL TERMS
Top line: Means the company’s revenues.
Bottom line: Means the company’s profit.
Bear Market
This is a market condition where securities prices are falling because sellers (bears) have overwhelmed buyers (bulls) and the market outlook is pessimistic (bearish).
Bull Market
This is a market condition where securities prices are rising because buyers (bulls) have overwhelmed sellers (bears) and the market outlook is optimistic (bullish).
Market Volatility
Market volatility is the rate of change in the price of a stock or security. Stock prices normally move up and down. Volatility is high when the price changes rapidly over a short period of time.
Stock markets are places where buyers and sellers meet to exchange equity shares of public corporations.
Equity: the common stock of a corporation
SPEAKING PRACTICE
Make a sentence using one or more of the following words:
Scheme, skim off, subsequent, skyrocketed, exacerbate, shortfalls, shut-down, maintenance, hefty, windfall profit, fossil fuel, benchmark, cap, grid, handout.