Energy prices will be decided by the European Energy Council. The Czechia will try to remove the ceiling on gas prices from Russia

Energy prices will be decided by the European Energy Council. The Czechia will try to remove the ceiling on gas prices from Russia
Energy prices will be decided by the European Energy Council. The Czechia will try to remove the ceiling on gas prices from Russia

Jozef Síkela|Photo: Office of the Government of the Czech Republic

The price of electricity depends on the most expensive source currently being used. Currently, these are gas-fired power plants. While in the Czech Republic they make up ten percent of the energy mix, within the European Union their share reaches almost 24 percent.

Two proposals stand against each other, said Minister of Industry and Trade Jozef Síkela (for STAN). One envisages separating the price of gas from the price of the final power plant, which determines electricity prices. “This means that those high gas prices, which are the subject of the energy war, do not affect electricity prices,” said Síkela. The second proposal wants to establish maximum prices for all other electricity productions except gas.

The Czechia wants to separate electricity and gas prices

The Czech Republic will try to remove the question of a possible ceiling on gas prices from Russia from Friday’s program of the Energy Council. According to Síkela, it is rather a political tool, not a solution to the current energy crisis in Europe.

The Czechia will want to include in the negotiations, for example, the so-called Iberian model, which would separate the prices of electricity and gas on the market. According to the Czech minister, this would help especially in the case of electricity, the prices of which could be reduced to the level of about 200 to 400 euros per kilowatt hour. Conversely, in the case of gas, prices would probably remain at a similar level as they are now.

Photo: European Commission

Síkela also wants to open a discussion on the possibility of limiting sales of emission allowances on Friday. According to him, for example, the annual reduction of the allowance program would not mean a deviation from the EU’s climate goals. “The situation is extraordinary, therefore it would also be an extraordinary measure,” he emphasized. At the same time, however, he added that he does not give the possibility of limiting the program with emission allowances much chance, because the European Commission is against it.

Síkela also repeated that the Czechia cannot leave the pan-European electricity market. “We do export electricity to neighboring countries, but on the other hand, we are 100% dependent on the import of gas and oil. Therefore, it cannot leave the electricity market and subsequently demand solidarity in other markets.” added the minister.

Regardless of how the European negotiations turn out, the Czech Republic is also preparing its own solution. According to Síkela, any agreements reached by the ministers of the EU countries responsible for energy will not be enough to solve the crisis.

Prime Minister’s adviser: Ceiling six and ten crowns per kilowatt hour

The price of electricity for households and companies should be capped at six to ten kroner per kilowatt hour, Jakub Kajzler, one of Prime Minister Petr Fiala’s (ODS) chief advisers, told Prav.

Štěpán Křeček|Photo: Jan Bartoněk, Czech Radio

Another adviser to the prime minister, Štěpán Křeček, said that the government should cap the price at the level of 200 euros (about 4,900 CZK) per megawatt hour, by the end of the year at the latest. However, the price for end customers will be higher due to the fact that it also needs to include a regulated component in which e.g. electricity transmission fees are paid.

“Already capping at 200 euros is a significant reduction against what we are seeing on the exchanges now and it gives confidence to the market. It certainly does not mean that the price cannot go lower, it is just a maximum beyond which the price cannot rise.” said the Right.

The Ministry of Industry has a proposal for compensation for companies. The new proposal should also offer the possibility of compensation to companies whose profitability has fallen more significantly due to the current crisis. According to the president of the Chamber of Commerce, Vladimír Dlouhé, capping prices is a necessary measure. The chamber prefers it to happen at the EU-wide level.

Due to high electricity prices, for example, the leading rope manufacturer Lanex has already limited the operation of energy-intensive machines and is transferring part of its production from Opava to Poland. Lanex’s sister company is working on moving production to Turkey.

The article is in Czech

Tags: Energy prices decided European Energy Council Czechia remove ceiling gas prices Russia

NEXT Stories from the First Republic: free audiobook by Franta Habn from ikova