This EU Chatter Over Excess Profit For Utility Companies

 This AM, there's a fair amount of chatter going on in Germany with this idea point of adding some kind of 'tax' for utility companies have too much profit.  

Creating a problem for stocks this AM?  Well...yeah.

How much is the total 'profit' from this EU 'tax'?  The discussion goes to around 140 billion Euro from across all EU member states.  

How would it funnel back into each society?  That hasn't been explained, and you just wonder if each person would get a 'fair' cut of the 'loot'.  Would the German cut be bigger than the Spanish or Czech cut?  That's another unknown in this game.

Who's in charge of the 140-billion and it's safe return?  That's an unknown as well.

What's likely to happen in the end?  I would suggest three scenarios:

1.  Utility companies will shift to late and delayed actions....creating a chaotic event here and there....where incoming funds have to be used to resolve/fix things.  So the 140-billion Euro a year number....will rapidly decrease to half that amount.

2.  Utility companies will delay modernization plans....to the point that the utility operations will be in dire trouble and require the EU to gift them money....to carry out their project.

3.  Some EU gurus will build a return distribution program....where 100-percent of whatever France or Germany delivers into the pot....can never be returned in the full amount.  Eventually, some German opposition party will awaken....note that 40-percent of whatever got shipped to the EU from Germany....is going to someone else in the EU, and raise a big fuss. 

I'm not condemning this action....because it's obvious that public utility 'control' in Germany simply does not exist.  But relying upon the EU to be the fixer of your issues....usually promises chaos and trouble later.  

One key point, once a utility company becomes a public situation....with stock involved, then there has to be a quarterly or yearly revenue distribution point, and if some government guy stands there (from the German federal point or the EU 'house')....saying you can only have 1-percent on your yearly dividend (instead of 2.5 percent)....why would I bother owning stock controlled by the government?  

For reference, if you hold RWE stock, it presently pays around 2.13 percent on dividends.  If you own EON stock, it presently pays around 5.35 percent on dividends (great stock at roughly 9 Euro a share).