Czech energy regulator to announce regulated prices, with electricity expected to edge down and gas to rise

The Energy Regulatory Office (ERÚ) will announce today the so-called regulated component of electricity and gas prices for next year. According to analysts’ expectations based on the authority’s initial proposal, the regulated component of electricity prices could edge down slightly compared with this year. Gas prices, by contrast, are expected to rise by up to 15 percent, which would mean an increase in costs of tens of crowns per megawatt-hour (MWh). The final prices may, however, differ from initial expectations. Suppliers determine the larger share of the price, and most of them have announced price cuts for next year.

This year, the regulated component accounts for more than 39 percent of the final electricity price for households and about a fifth of the gas price. Its share of the final price is lower for large consumers. The regulated component mainly includes charges for transmission and distribution, as well as a contribution to renewable energy sources in the case of electricity.

The ERÚ presented suppliers with its proposal for next year’s regulated component at the beginning of November. According to analysts, the proposal envisages a reduction of a few percent in the regulated component of electricity prices, while the regulated component of gas prices is expected to rise. For example, the Czech District Heating Association warned that the proposal envisages higher costs for transporting gas to customers. However, the proposal may still have changed following comments from suppliers or authorities, so the ERÚ’s final price decision may differ from the initial proposal.

Experts say, however, that a sharp rise in regulated prices should not happen again. This year, the regulated component of electricity prices for households rose by 65 percent year on year, an increase of more than 1000 Kč per MWh. The regulated component of gas prices for households rose by nearly 39 percent year on year for this year, an increase of 125 Kč per MWh. The regulated component rose even more sharply for large consumers.

The so-called commercial component, which makes up most of the final prices paid by consumers, is set by suppliers. Most of them adjusted their prices repeatedly during this year, gradually lowering them for customers as energy prices fell on the energy market. Most major suppliers have also announced further price cuts for the beginning of next year.

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