Updated 3:25 p.m
1/11/2023, 10:15 a.m
The Energy Regulatory Office (ERÚ) proposed an increase in the price of the regulated energy component by tens of percent. According to Prime Minister Petr Fiala (ODS), however, there is no danger of a dramatic price increase and the price will only increase minimally. However, according to analysts, the prime minister is operating with average figures for the public, because the rate of increase in energy prices will depend on the setting of contracts this year, and up to a third of customers could pay extra.
On Tuesday, ERO proposed an increase in the price per megawatt hour for the regulated component of energy by approximately 1,400 crowns including VAT. Households would thus pay 71 percent more than now. According to Fiala, this will not be the case. The rise in energy prices, which could affect households in the Czech Republic from next year, was also covered in a special TN Live broadcast, which you can watch at the beginning of the article.
Energy expert Jan Béreš believes that the decision to raise the price of the regulated component of energy is mainly related to the modernization of the electricity network in the Czech Republic. “Prices haven’t been rising dramatically lately, it had to come once, and that’s now,” he means.
“A drastic energy increase is not happening. Anyone who claims otherwise is just spreading panic. This also applies to what the opposition says. I want to emphasize that energy prices will not rise by tens of percent, and not under any circumstances. People will pay as they did this year or at most one percent more,” claimed Prime Minister Fiala on Tuesday. Analysts correct his statement, however, because a third of all households should see energy increases of tens of percent.
According to economists, the increase in the price of electricity for customers will differ significantly from household to household, mainly because of how they set their energy payment this year. According to analyst Béreš, customers who now have electricity fixed at the price of the government ceiling do not have to worry about price increases at all. On the contrary, according to Barton, the people who still pay the prices fixed before the crisis will pay the most.
”Thus, a third of the people who are still serving in the old, pre-crisis price lists and still pay very low prices, so for them it will mean a high price increase. Not just by increasing the regulatory component, but by ending their old bargain power prices and paying what the rest of us pay now,” summed up Bartoň.
The economist pointed out that the announced proposal could further deepen people’s reluctance to buy and force them to save more. “So for now we postpone consumption until the future, because people are more likely to save because of the uncertainty of the future,” he mentioned that if customers continue in this trend, it will logically lead to a further deterioration of the economic growth outlook.
According to the ERO, the planned price increase is based on the fact that the state will stop subsidizing part of the payments it covered due to the energy crisis, namely fees for renewable energy sources or the costs of technical losses or the costs of support services.
According to political scientist Lukáš Jelínek, the government mainly failed to explain that the price increase only applies to roughly 40 percent of the energy component, which is regulated and applies for the entire calendar year. The unregulated component is set by the suppliers, who can vary the price during the year.
Political scientist: The government is playing with social peace
“From the point of view of the development of public opinion, it is important that while yesterday afternoon the Prime Minister talked about impacts in the order of one percent, in the evening the Minister of Industry Jozef Síkela (STAN) talked about the fact that for those who have advantageous contracts, it could be up to ten percent,” political scientist Jelínek evaluated the government’s information regarding energy price increases.
He believes that even if the price increase affected ten percent of the Czech population, it is a large number. “I think that while the government is able to secure political trust in the House of Representatives, it has resigned itself to any trust and any explanation of its policy in the case of voters.” he said. According to him, Petr Fiala’s cabinet is significantly lagging behind in explaining the reforms and is “playing with social peace”.
“When we calculate the proposals of the state budget, the effects of the consolidation package, which includes, for example, an increase in the price of water and sewage, this information about higher electricity prices is just the last drop in the government’s insensitive approach,Jelínek sharply criticized the government’s policy.
The Czech Republic is in for a brutal increase in energy prices. Up to tens of percent, the office announced: