The price of heat in Pilsen is set to increase by a quarter, representatives rejected a 40% price increase

Pilsen representatives today approved a 28.3 percent increase in the price of heat from January next year. In mid-October, the board of directors of Plzeňská teplárenská proposed a price increase of 40 percent, which the city management rejected. The average household will therefore pay 268 crowns more per month than before. 30 of the 42 representatives present voted for the price increase, the opposition ODS and TOP 09 abstained, ČTK found out. The heating plant, which is the largest supplier of heat in the west of Bohemia, is majority owned by Pilsen and 35 percent by Daniel Křetínský’s EPH group, whose representatives approved the increase on Wednesday evening. The general assembly of the heating plant will have the final say on November 28.

According to the general director of the heating plant Václav Pašek, the people of Pilsen will continue to pay the lowest price for heat in the country, the current average in the Czech Republic is under 1200 CZK/GJ according to the Heating Association. This year, the people of Pilsen pay 626.67 CZK/GJ with VAT for heat, i.e. 569.34 CZK/GJ without VAT.

“Originally, the board of directors proposed to increase the price of heat for the year 2024 for residents by CZK 240 per gigajoule without VAT. The new agreement with the second shareholder provides for an increase of CZK 161.30/GJ,” said city councilor Vlastimil Gola (YES).

According to Mayor Roman Zarzycký (ANO), it was possible to reduce the price increase by roughly a third against the original proposal. “The negotiations were very tough, but constructive. Our goal is for Pilsen to continue to have the best heat price in the country,” he said.

According to Pašek, there are four main reasons for the price increase. “The heat commodity is in a deep loss, and all state subsidies for the heating industry have also been cancelled, which means we will lose 200 million crowns. Furthermore, we must continue the decarbonization process (the company’s departure from coal by 2030), which requires a total investment of around seven billion crowns,” he said. According to Pašek, the heating plant cannot maintain a loss-making, i.e. dumping, price of heat for a long time. It would face fines from the antimonopoly office for favoring customers of district heat over other types of heating. “Furthermore, a trading company cannot, with the care of a proper manager, have this commodity at a long-term loss,” he added.

According to Zarzycký, the city does not increase the price more than it has to, and the price increase is ultimately set so that the heating plant ends up with a so-called operating zero. Pašek added that if the current price were to remain, it would cause the company a loss of 443 million crowns from the sale of heat next year. “Already this year, we expect a heat loss of 479 million crowns,” he said. The price increase approved today will not ensure a profit for the company, but it will not cause a loss either.

The opposition did not reject the necessity of price increases. But she paused over why the previous four years, after EPH’s entry into Plzeňská teplárenská, managed to increase prices minimally and only cosmetically, mainly due to the fact that the company was helped by significantly profitable sales of heat. The management of the city and the company argued that this was not possible according to the regulations of the Energy Regulatory Office. “We did not receive an explanation why the loss from another commodity (heat) cannot be remedied with the income from one commodity (electricity),” said representative David Šlouf (ODS). Pašek said that the favorable price of electricity cannot compensate for the low price of heat, but thanks to electricity, the entire company maintains a solid profit. Former mayor Pavel Šindelář (ODS), a member of the supervisory board of the heating plant, said that he understands the price increase, but he cannot raise his hand for it, because the city management has not committed to not having dividends paid out of the profit that the city has been receiving from Plzeňská teplárenská for several years. The mayor added that it will only be the subject of further negotiations.

Plzeňská teplárenská supplies 54,000 households, which can be roughly converted to 145,000 inhabitants of the 180,000-strong Pilsen. In January of this year, the company increased heat prices by an average of 4.8 percent to 626.67 CZK/GJ including VAT, in January 2022 it increased the price of heat by 9.7 percent.