Nov 12, 2023

Energy Prices Hike: How Much More Will You Have to Pay Next Year?

According to a proposal by the Energy Regulatory Office (ERO), the regulated price of electricity in the Czech Republic is expected to increase by 71 percent, next year.

Which would result in an annual increase of around four thousand crowns for one household.

What does the ERO’s proposal state?

The ERO’s proposal states that the regulated price of electricity should increase by 71 percent next year compared to this year. After including VAT, Czech electricity will increase by an average of CZK 1,408 per megawatt hour.

According to data, the average Czech household consumes around three-megawatt hours of electricity per year. However, following the increase in the regulated component, it will cost Czech households around CZK 4,200 per year.

What is the regulated component?

Energy billing in the Czech Republic consists of two components. The first part of the price is the price per commodity, which can be influenced by individual suppliers, and the second part is the regulated component, the amount of which is decided by the ERO.

Why is this happening?

Up until now, the state has partially been subsidizing energy for Czech households. However, this is about to change, and consumers will have to pay again, for example, for fees for supported renewable sources, costs for technical losses in the transmission and distribution system or costs for support services.

The government took this initiative in response to the dire condition of the state budget. Part of the payments will thus be passed on to customers, households, and companies.

What do the government and experts say?

At a press conference on Tuesday, Prime Minister Petr Fiala (ODS) denied that the ERO’s proposal would mean significant price increases in electricity for Czech households. According to the Prime Minister, the increase in the prices of regulated electricity will be compensated for by a decrease in the prices of power electricity.

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“I must stress immediately and clearly that energy prices will not rise by tens of percent. Because the price of power electricity is falling, they will pay mostly the same as this year or at most one percent more,” said Fiala.

Some experts are not in complete agreement with the Prime Minister’s words and according to them, the type of contract customers have with their suppliers will play a major role next year.

“For the third of people who are still on the old, pre-crisis price lists and still pay very low prices, this will mean higher prices. Not just because the regulatory component has increased, but also because they will end the old, favourable prices for power energy, and will pay what the rest of us are currently paying” energy expert Jan Béreš told TN.cz.

In a post on the social network X, Tomáš Prouza, president of the Union of Trade and Tourism, said the ERO’s decision has thwarted the government’s efforts to lower prices and tame inflation in the Czech Republic.

“Today’s proposal by the ERO means a significant increase in energy prices for households and companies, especially in the energy-intensive parts of the industry, including the food industry,” Prouza wrote.

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