Czech energy regulator chief: Office had no leeway on prices and had to reflect higher costs

The Energy Regulatory Office (ERÚ) had to reflect higher costs for energy system services, including support for renewable energy sources (RES), in the increase in the regulated component of energy prices for next year. These costs are closely linked to energy market prices. Stanislav Trávníček, chairman of the ERÚ Council, said this at a meeting of the Chamber of Deputies’ Economic Affairs Committee today, adding that the office has no leeway when setting regulated prices. He noted that the state subsidized the higher costs this year. In 2024, however, the state contribution will be lower than in the pre-crisis years.

For households, the office proposes a year-on-year increase of 71 percent in the regulated component of electricity prices and around 39 percent for gas; the increase for large consumers is expected to be even more pronounced. Business organizations have criticized the proposal, and the opposition says the situation is a government failure. Prime Minister Petr Fiala (ODS), however, said that final energy prices next year would rise by no more than a few percent compared with this year.

„The regulatory office has no leeway in deciding how to regulate prices. This is precisely determined by law,“ Trávníček said today.

When setting regulated prices, the office follows a predetermined methodology and uses the cost statements it has collected, according to Trávníček. „Prices are calculated on that basis. Discussions then take place and the prices are gradually refined,“ the head of ERÚ explained.

ERÚ therefore had to reflect the costs of operating the network in regulated prices, he said. According to Trávníček, the increase in costs is closely linked to energy market prices. „Those prices are up to 2.3 times higher than in the pre-crisis period,“ he added. The state subsidized these higher costs this year. The regulated component alone accounted for more than 60 billion crowns; next year, the figure will be just 9.3 billion crowns.

In this context, the head of ERÚ noted that payments to support renewable energy sources (POZE) will account for the largest share of the increase in the regulated component. According to Trávníček, state subsidies for next year are even lower than in the years before the energy crisis, when the state covered at least half of POZE costs, and often more.

The significant increase in the regulated component of energy prices was criticized mainly by opposition members of the committee. ANO MP Berenika Peštová said it was primarily a government failure, criticizing the decision to shift some charges back onto consumers. She said it was alarming that consumers would pay a larger share of POZE costs than in the past. She is therefore calling on the government to increase state subsidies at least enough to raise its share. She also expects the situation to worsen in the future.

According to committee chairman Ivan Adamec (ODS), the increase in the regulated component of energy prices is primarily a result of the EU’s Green Deal. „The figures are alarming, and this will cost a lot more money. It will be especially difficult for businesses,“ he noted. He said that service planning should not rely solely on the market price of electricity, as it is unpredictable these days.

Energy prices consist of a commercial component, set by suppliers, and a regulated component, administered by the state. Next year, the regulated component is expected to make up around 40 percent of the final electricity price for households, and around 20 percent of the gas price.

ERÚ has proposed a significant increase in the regulated component of energy prices for next year. Under the proposal, the regulated component of electricity prices for households would rise by 71 percent year on year, meaning an average increase of around 1408 Kč per megawatt-hour (MWh), including VAT. The regulated component of electricity prices for large consumers would rise even more sharply: by 113 percent year on year for high-voltage customers and by 206 percent for very-high-voltage customers. The increase in the regulated component of gas prices is expected to be somewhat smaller. For households, it would rise by around 39 percent year on year, meaning an increase of about 125 Kč per MWh of gas. For large consumers, the increase would be 42.5 percent. ERÚ will announce the final regulated components of energy prices at the end of November.