Analysts: Czech energy prices will vary, most customers will pay more

Most customers are likely to pay more for electricity next year, analysts believe. However, price trends will vary widely. While for many households the increase is expected to be just a few percent, for businesses much will depend on further movements in market electricity prices. For large consumers, however, the increase could reach tens of percent. This is according to comments by analysts to the Czech News Agency (ČTK).

The regulated component of energy prices will rise significantly next year. For households, it will increase year on year by 65.7 percent for electricity, where the regulated component accounts for about 39 percent of the final price. For gas, where the regulated component makes up 20 percent, it will rise by 38.8 percent. The regulated component will rise even more sharply for large consumers. However, according to the Energy Regulatory Office (ERÚ), the increase in the regulated component will be offset by a decline in suppliers’ commercial prices.

„The trend in electricity costs will vary considerably, depending above all on the consumer’s starting price for commodity electricity in 2023,“ said Michal Macenauer, executive director of consultancy EGÚ Brno.

For most small consumers, he said, a modest increase of a few percent can be expected. The situation will be more complicated for large consumers, however, because the price of commodity electricity for them is a major unknown, according to Macenauer. „In 2023, a substantial proportion of large consumers bought electricity on short-term markets at favourable prices, and their costs may rise noticeably. If we assume the same price for commodity electricity, the increase in regulated charges alone will raise total costs by approximately 10 to 18 percent,“ Macenauer noted. In practice, he said, much will depend on a comparison of commodity electricity prices.

Radim Dohnal, an analyst at Capitalinked, stressed that the impact of higher regulated prices will differ for every consumer. „It will depend mainly on how the still highly volatile price of commodity electricity changes for them, their distribution tariff, their consumption, and, in the case of a dual-tariff plan, how they divide their consumption between peak and off-peak rates and which distribution area they are in,“ Dohnal explained. As a result, some households may pay more for electricity next year, while others may pay less.

According to Jiří Tyleček, an analyst at XTB, many consumers may have gained the impression, thanks to state subsidies, that the increase in energy prices associated with the energy crisis was not substantial. He noted that the price jump will now be felt especially by consumers who had fixed their energy prices at pre-crisis levels. „Customers on open-ended contracts may see their costs rise only slightly, by a few percent. The bill will depend on how commodity electricity prices develop, and they have been moving favourably in recent months. Even so, electricity prices on the exchange are still more than double their pre-Covid levels,“ Tyleček added.

For Jiří Gavor, executive director of the Association of Independent Energy Suppliers (ANDE), today’s announcement by the ERÚ came as a surprise, because the regulator found greater savings than had been anticipated in recent days. „Customers are benefiting from favourable trends in the unregulated component. Exchange prices for electricity and gas are developing very well, and unless something entirely unexpected happens, reductions in the contractual component of electricity and gas prices are not over,“ he remarked.

Petr Štajner, director of Greenbuddies Consulting, sees a systemic solution to the current situation with electricity price formation, among other things, in speeding up the decentralisation of electricity generation and supporting investment in strengthening companies’ energy independence. However, he said, lengthy permitting processes and nonsensical bureaucratic barriers remain obstacles.

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