How much will we pay for electricity? Five hundred less per year, but also 24 thousand crowns more iRADIO

An increase of zero, or around 40 percent. Next year, instead of the expected reduction in electricity prices, households will in many cases face additional price increases. The reason is the increase in the price of regulated services for the supply of electricity, including the return of the fee for renewable energy sources (POZE). Since October 2022, the fee due to the dramatic increase in energy prices due to Russia’s war in Ukraine has been paid by the government from the state budget, now due to savings it has cut most of the energy subsidies.

Prague
11:00 a.m November 10, 2023

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Consumers, including companies, will thus have to pay all costs associated with the supply of energy from their own funds.

The proposal for prices for next year was published last week by the Energy Regulatory Office (ERÚ). According to him, in the case of electricity for households, the regulated component of the price, including POZE, should increase by 71 percent, and for gas by 39 percent.

It is POZE that contributes almost half of the growth. If this will actually be the case, the ERO will decide after the conclusion of the comment procedure on the proposal, which will be in the second half of November. The prices should then apply from January 2024.

Given that the regulated component makes up a smaller part of the final price for electricity, roughly 40 percent, the overall increase in electricity prices will be lower. It can also be compensated by the remaining part, i.e. the price of electricity itself offered by suppliers, which has been falling in recent months.

The increase in prices will therefore be different for everyone, it depends on the price list of a specific supplier or if a given household has a fixed price and at what level, as well as what consumption someone has and what the relevant tariff is.

Examples of payments for iROZHLAS.cz were processed by the companies Centropol Energy and Tedom. The tables show that the smallest increase, even a slight decrease, is expected from January for households that now pay the price capped for 2023 by the government for (power) electricity itself.

This means approximately five thousand crowns without VAT per megawatt hour (MWh). For a family in an apartment that only lights, cooks and uses ordinary appliances with electricity, the price for power electricity should drop to around four thousand crowns from January 2024, and the overall price increase, despite the growth of the regulated component, will thus be only around two percent.

A family in a house, which additionally heats water with electricity, will pay only 0.6 percent more overall than now with the same drop in the price of power electricity. And a family that also heats their house with electricity will have a bill seven tenths of a percent lower than it is now.

However, according to Centropol’s calculations, the situation will be much worse for people who have so far paid little for power electricity. For example, families who fixed it at the end of 2021 after the collapse of the Bohemia Energy company at the level of 3,400 crowns without VAT, and this fixation will only now end, are in for a shock from January.

In an apartment, they will pay a total of 34 percent more, and in a house with electric heating, the bill will increase by 42 percent. This would mean almost 24 thousand crowns more per year than this year.

Centropol board member Jiří Matoušek is convinced that part of the regulated prices, for example for input and for the distributed amount of electricity and natural gas, must increase, because the state subsidized them for this year and this assistance ends.

Revenue from allowances

“However, the RES fee did not have to be returned in full. We believe that the more appropriate procedure was to divide the growth of regulated prices, including POZE, into two years, i.e. between 2024 and 2025,” said Matoušek.

According to him, the government should also find a way to start using revenues from emission allowances to compensate for the costs of POZE.

“Over the past five years, the state has received over 80 billion crowns from emission allowance auctions and expects to receive up to 400 billion crowns in this decade. In 2024 alone, it should be more than 30 billion crowns. In simple terms, we can cover most of the costs of POZE in 2024 from the revenues from emission allowances and not charge these costs to households and companies. That should be the goal of the Czech state,” Matoušek pointed out.

Also thanks to the fact that POZE is not paid in the regulated gas component, its growth next year will not be as large as that of electricity. Moreover, in the case of gas, the regulated part only accounts for around 20 percent of the final price paid by households.

The proposed increase in the regulated part from January will therefore mostly completely compensate for the cheaper gas itself. According to Centropol’s calculation, the final price of natural gas for households that paid the capped price in 2023 will drop.

“They should save 20 to 25 percent of costs,” said Matoušek.

Four thousand a year

The supplier Tedom Energie calculated the effects of the increase in regulated electricity prices on the example of households similar to Centropol. However, for illustration purposes, he calculates the impacts at the price of power electricity, which is already common now, slightly below the government ceiling.

So it amounts to four thousand crowns without VAT, and for next year households will drop slightly to 3,500 crowns without VAT.

The growth of the regulated component for the household in the apartment, for example, means an increase in the payment by more than four thousand crowns per year, i.e. by 47 percent compared to this year, but in the final price it would be reflected in an increase in price by nine percent, i.e. by 2300 crowns per year.

In a house with electric heating, the total bill per year will increase by seven percent, i.e. by four thousand crowns.

For small companies, this would mean an increase in the total price of five to ten percent. For example, for a model car paint shop in the Central Bohemia region with greater electricity consumption, the growth of the regulated component represents an additional cost of 164 thousand crowns per year, i.e. an increase of 86 percent in the given tariff.

However, the impact on the final price will be “only” ten percent due to the discounting of power electricity, and the paint shop will thus spend a total of 88,000 crowns per year.

‘Everything is more expensive’

Even according to the head of Tedom Energy, Jakub Odložilík, price growth in 2024 will be different, but for many people it will be a significant increase in regular monthly payments.

“And that at a time when basically everything is more expensive. For low-income households and households living in energy-intensive buildings, this will certainly be another significant hit to the budget,” he warned. He then expects a huge impact of the increase in the price of the regulated component on companies, primarily on energy-intensive industries.

For example, the Ocelářská unie, which brings together companies from the heavy industry, calculated in the past days that the increase in part of the price could be as much as 227 percent.

“For a large metallurgical company, annual costs would thus increase by more than half a billion crowns,” said the Ocelářská unie. For example, Třinecké železárny, the largest steel producer in the Czech Republic, according to its director Roman Heide, expects an increase in energy costs by more than 600 million crowns next year.

At the same time, steel workers deny that the increase in the regulated component, including POZE, will compensate in their case for the lower price of power electricity from traders.

“Large industrial companies usually ensure the supply of power electricity by purchasing products in advance, in so-called tranches. In such a case, the power component of the price of electricity does not decrease quickly or significantly,” said the head of the union, Daniel Urban.

Energy-intensive companies want to discuss the whole situation and the possibility of some measures with the government.

High rises and expectations

According to Jakub Odložilík from Tedom Energie, it is not clear whether or not the government should continue subsidizing electricity prices, due to the need for savings in the state budget. However, the government should not trivialize the situation surrounding energy prices by saying that it is a price increase of only a few percent.

“That’s certainly true, but even units of percentages of high amounts represent high increases. In addition, it should be emphasized that people generally expect a drop in prices, which were extreme in 2023, and now they are learning that no drop will come,” he points out.

According to him, the reasons for the growth of regulated prices should be explained more, and they should be discussed frankly.

“For gas networks, there is a reduction in consumption, but due to the aging of the network and inflationary increases, the costs of its management continue to increase. In the case of electricity, the point is that the increase in renewable sources in the network, which has been extreme in recent years, obviously significantly increases the requirements for the throughput of this network, and this must be reflected in the payments,” said the head of Tedom Energie.

Jana Klímová

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