Energy prices: what discounts to expect in advance payments and who will feel the ceiling the most

People will feel the relief from unmanageable energy prices as early as November. From October, the waiver of the fee for renewable sources will apply, until the November and December advances for electricity and gas, consumers will be prescribed a government price ceiling all at once and a discount of several thousand as part of the energy-saving tariff. So what will the final annual energy bill look like and for whom will the planned discounts have the greatest effect?

“The mechanism is now being fine-tuned, the suppliers are ready that the changes will apply from November. In general, it can be said that the greatest relief will be felt by people who started receiving the new price regulation at the beginning of the second half of this year, where the prices of electricity and gas began to exceed the set ceiling,” energy analyst Jiří Gavor told Echo24.

This means that all people whose fixed price has ended or who were already on spot price lists, and in the case of electricity paid more than the set ceiling, will now not be able to pay more than 6,000 crowns per MWh including VAT. This amount does not yet include the regulated component, where distribution is paid for, among other things. In total, customers should not pay more than 7,000 to 9,000 crowns per MWh.

“For customers who already have a price higher than the government ceiling, the changes will be written into the November deposit, or rather into the long-term price regulation that the suppliers will send out. There will therefore be a certain amendment of the energy market, as all prices higher than the ceiling will be reduced to a single electricity price of 6 crowns per kWh including VAT. At the same time, there are customers who have contracted prices below this ceiling. For example, because they managed to conclude a two-year fixation last year. And no one will take this lower price from them, the suppliers must adhere to it,” Gavor points out.

However, a different situation occurs if people pay a lower price than the ceiling, but have a contract for an indefinite period, when the supplier has the right to continuously increase prices. In that case, the supplier will most likely match the prices to 6,000 per MWh, for example from the new year. “The negative side of capping is that the market will become unified. It will mean that people’s motivation to change suppliers will practically disappear,” says Gavor.

As for spot price lists, even in this situation suppliers should not force their customers to access them. “Suppliers who have purchased energy should keep their price lists for a certain period of time. From the point of view of the consumer, it will now, so to speak, not matter. The supplier will supply him with a fixed price list of 6,000 crowns per MWh, and it will only depend on the market’s possibilities as to how he will purchase the raw material. If liquidity allows suppliers, they will be able to buy products, not just spot. It is spot purchases that often take place out of desperation, because futures contracts on the stock exchange are now associated with such large requirements for financial security that suppliers cannot even afford it,” said the analyst.

According to the current plans, the government is also still counting on the very long-discussed savings tariff, which was supposed to be the only help for people with high energy prices before it decided to cap the prices. However, he is counting on it only until the end of this year, when consumers will receive a general discount of approximately four thousand crowns, as Industry Minister Jozef Síkela (STAN) claims. Both the discount thanks to the savings tariff and the price ceiling should be reflected in the payments for November and December by households.

As part of the cost-saving tariff, the fee for renewable resources in the amount of 599 crowns per MWh is also to be waived for people and companies. “It is necessary to understand that due to the remission of the fee only from October, it will only apply to a proportional part of consumption. So if someone consumes one megawatt-hour of electricity between October and the end of the year, they will have a minus of 599 crowns on their annual bill. When he uses less, he is charged less. The distribution system operator reads this from the electricity meter and then reports it to the merchant,” said Gavor.

The government set the maximum prices for electricity and gas after Monday’s meeting. Retail consumers, i.e. households and businesses, will pay a maximum of six crowns including VAT for one kilowatt-hour (kWh), gas will cost a maximum of three crowns per kWh. The setting of the price ceiling should already have an effect on the amount of advances in November. On Friday, the amendment to the Energy Act, which will allow the government to set maximum prices for electricity and gas in the event of an extraordinary market situation, is to be approved by the House of Representatives.

The article is in Czech

Tags: Energy prices discounts expect advance payments feel ceiling

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