If you look at the potency upgrades in the hat box they say Potency I: 50% to level 1 spells, etc... Should probably update that so as not to confuse the newbies.

Also, because of that there's no way to see the actual spell power you can get without spending your greens on a hat to see. Mighty disappointing to spend all those greens and wind up with a lousy potency +40.