A big price blow for Czech households. Already on January 1, 2024, it will all break out again, hold on

A big price blow for Czech households. Already on January 1, 2024, it will all break out again, hold on
A big price blow for Czech households. Already on January 1, 2024, it will all break out again, hold on

In the last year, the Czech company has been dealing with significant changes in electricity prices, which have raised a number of questions and concerns. This trend has a profound impact on both households and industry and is provoking discussions about the future competitiveness of the Czech economy. Several factors are behind this development, including regulations, the global economic situation and a lack of competition in the market.

The main reasons for the price increase

Behind the expected increase in electricity prices for the final customer in 2024 is the regulated component of the price, whose significant increase of 71% for households and even 206% for large industrial enterprises is mainly due to the fact that the state decided to cancel last year’s subsidies. This move is the result of empty state coffers and the government’s efforts to limit state spending. An important factor is also the lack of competition in the market, where manufacturers and suppliers who increased their income during the crisis now do not want to lose the increased profits.

Impact on households and industry

Most households have open-ended contracts, which means that even if the price of electricity itself falls slightly, the increase in distribution charges and the reinstatement of some state-paid charges will mean that families will feel an increase of tens of percent. For industrial enterprises, the situation is even more complicated, as the growth of regulated components is even more pronounced, which raises concerns about the loss of competitiveness of Czech companies abroad. Those who had fixed prices with suppliers, such as clients of Bohemia Energy, will be particularly affected. According to Kalkulátor.cz, it is about about 400 thousand peoplewhich will end their fixation in 2024, which means a significant increase in costs.

Political contradiction and possible solutions

The situation is complicated by the contradiction between the government and the industrialists. The government claims that the drop in prices on the exchange will offset the rise in the price of regulated electricity, but industry representatives warn that this may not always be true. For example, companies that have already fixed their prices for 2024 may face significant financial losses.

The government could help, for example, by increasing support for renewable energy sources so that the consumer does not have to pay for it, or by taking measures to increase competition in the market. Another option is to boost domestic electricity production to reduce dependence on imports. However, due to the empty state coffers and insufficient construction of electricity resources in the past and in the near future, the government’s options are limited. The solution is also at the European level, when more emission allowances will be released to the market and their reasonable price and not what we see. Unfortunately, this government is not able to enforce much on the European level, or at least I don’t remember anything.

Photo: Shutterstock

Conclusion: Who is to blame and how can it be solved

The key issue is that those who have profited from higher electricity prices now do not want to lose those profits. This creates a difficult situation for the government. We need strong and decisive politicians now. But we don’t see you. Instead, we see a debate over whether to nationalize CEZ or not.

State aid depends on empty coffers and insufficient electricity production. It is therefore time to find a way to balance the needs of the market, households and industry, and at the same time ensure that the Czech Republic does not remain in an energy trap.

Greater investment in renewables and diversification of the energy mix could be the key to long-term price stabilization. Although this may mean high costs in the short term, it can provide a permanent solution to energy insecurity in the long term. In addition, there is a need to increase transparency in the energy market and encourage competition, which can lead to better prices for consumers.

Ultimately, a new vision is needed to effectively and sustainably manage the energy sector. This requires political will, strategic planning and the involvement of all stakeholders: from government and energy companies to consumers and civil society. This is the only way to find a way out of the energy dilemma in which the Czech Republic currently finds itself.

Photo: Shutterstock

The article is in Czech

Tags: big price blow Czech households January break hold


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