Analysis: Czechs pay the highest electricity prices in the V4, but less for fuel

Czechs pay the highest electricity prices in the Visegrad Four (V4) region. While most neighboring countries use price regulation or other state interventions to curb increases in wholesale energy prices, Czechia is an exception. By contrast, fuel prices in Czechia are currently among the lowest in Europe. All the countries also struggle with housing affordability, while construction is lagging in Czechia. These are the findings of an analysis presented to journalists today by the Creditas Group.

According to the analysis, the main reason electricity prices are higher in Czechia than in the other V4 countries is the direct impact of wholesale prices. Poland, Hungary and Slovakia limit this impact through price regulation and price caps, according to Creditas. Regulated prices are usually lower than market prices. Hungary and Slovakia also use other state interventions to protect customers, the study says.

"As a result, Czechs pay 0,33 euros per kilowatt-hour of electricity—three times as much as Hungarians, twice as much as Slovaks and almost the same as Germans," said Václav Skoblík, commercial director of the UCED Group.

Czechia also fares worst when prices are compared with purchasing power.

Czechia does somewhat better in the analysis when fuel prices are compared. It currently has the lowest petrol prices in the region. Stable taxes and a strong currency help keep prices down, according to Creditas. But the picture is less favorable when measured against purchasing power, and domestic fuel prices are almost twice as high as those in Germany, the analysis says.

The analysis also noted that the planned new ETS 2 emissions trading system for transport and building heating could significantly change the current situation in the future.

The study also examined housing affordability, which it says is a problem across the V4 region. Prague is an extreme case, with the least affordable housing of any city when prices are compared with incomes. The situation in Czechia is also worsening because of weak construction activity. Last year, 4,4 apartments were built per 100.000 residents in Poland, 2,8 in Slovakia and 2,6 in Germany, compared with 2,4 in Czechia. Hungary fared worse, with 1,6. Czechia, however, compares more favorably than the other V4 countries in terms of the cost of rental housing.

"A major obstacle to the development of housing construction in Czechia is the extremely long building-permit process, which takes eight times longer than in Poland and four times longer than in Hungary or Slovakia," said Borek Simandl, commercial director of Creditas Real Estate.

The Creditas Group focuses primarily on long-term investment in conservative sectors. Its main business pillars are financial services, energy and real estate. It was founded by, and is owned by, Pavel Hubáček and his family.