Fiala advisor: The electricity ceiling will be 6 to 10 crowns per kWh

“We are talking about the parameters, it should be in the range of six to ten crowns,” Kajzler told Práv.

The average price of one kilowatt-hour (kWh) for households was around CZK 5.80 last year, but this year it is rising rapidly. People are catching up with their previous fixations and the price on the market has soared several times.

The goal will be to bring the prices to a level that will be higher than before, but will be accessible to the majority of citizens and companies

Jakub Kajzler

Most often, households now pay between six and ten crowns per kWh, but if they have so-called spot contracts for immediate prices, they can pay over 15 crowns. These depend on wholesale prices on the stock exchange, which according to the Kurzy.cz server are now EUR 570 (over CZK 14,000) per megawatt hour.

Such a price would mean an increase in payments of up to tens of thousands per year for households during refixation. People who, for example, concluded a contract with the largest supplier ČEZ in 2019 with a three-year fixation at the most common distribution rate D02d, which will end this fall, would now pay up to 250 percent more.

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In addition, the stock market is volatile, as recently as the beginning of last week, the price per MWh in Germany was a thousand euros. Government capping should avert such a catastrophic scenario soon.

In addition, people with high energy prices should be helped by a cost-saving tariff, under which households should receive an average of 4,000 crowns this year, and between 11,000 and 18,000 crowns by September next year, depending on consumption – of course, for all energy, not only electricity, but also gas and district heating or domestic boiler rooms.

It depends on the EU agreement

After pressure from the STAN movement, Minister of Industry and Trade Jozef Síkela (for STAN) is still considering increasing it to 10,000 CZK for this year.

According to him, the price ceiling will be based on what will be agreed on Friday at the extraordinary meeting of EU energy ministers, which Síkela called. “The national level is complementary to the European one and will complement what emerges from it. It should not conflict with it, but at the same time it should be such that it will work independently. If an agreement is not reached at the European level to the extent that the Czechia needs, the goal will be to bring prices to a level that will be higher than in previous years, but at the same time will be accessible to the majority of citizens and companies,” Kajzler told Právu.

It would be ideal to cap it at last year’s levels, but that is beyond economic reality

Štěpán Křeček, economist

European Commission President Ursula von der Leyen is expected to present the measures next week. According to Kajzler, a significant problem especially for companies will not arise this year, but next year, because the companies have contracted the price of electricity for this year. “But with the decision on support, we aim for an earlier date. That is the goal we are trying to reach,” he added.

According to the plan outlined by the chief economist of BH Securities and the Prime Minister’s other adviser Štěpán Křeček, 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.

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However, Křeček believes that the price per kWh could be between seven and eight crowns. “Of course, it would be ideal to cap it at last year’s levels, but that is beyond economic reality. Already capping at 200 euros is a significant reduction compared to what we see now on the stock exchanges, and it gives certainty 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,” he told Právu.

Will there be a war tax?

According to Křeček, such a price level should enable producers to increase their profits a little year-on-year, and it is also possible that they would not be subject to the so-called windfall tax announced by Finance Minister Zbyněk Stanjura (ODS).

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“It should refer to an extraordinary profit against the long-term average. If the suppliers were to adopt this solution, the profit would not rise so significantly that they would be affected by this tax,” stated Křeček. According to Kajzler, however, this tax is still expected.

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. ČEZ did not want to comment on the information about the possible capping of prices in the words of its spokesman Roman Gazdík on Tuesday. “We will wait for measures at the European level,” he told Právu.

The article is in Czech

Tags: Fiala advisor electricity ceiling crowns kWh

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