Czech industry representatives say energy price trends must be predictable

The development of regulated energy prices must be predictable in the coming years, business and industry representatives said. Commenting on the Energy Regulatory Office’s (ERÚ) new methodology for setting prices over the next five years, they acknowledged the need for new investment in energy networks but remained cautious about future developments. This emerged from comments made by the Confederation of Industry and Transport and the Czech Chamber of Commerce to the Czech News Agency (ČTK).

On Thursday, ERÚ published a new methodology for setting regulated prices over the next five years, which will take effect next year. According to the office’s current assumptions, regulated energy prices will rise year on year over the next five years by an average of roughly the rate of inflation, and by no more than one to two percentage points above it. Their exact level will be affected by developments in the energy market and consumption. According to ERÚ, the increase is intended to reflect the need for higher investment in networks.

The Confederation of Industry is cautious for now about assessing the new rules in detail. „What will matter is what the specific price decisions look like for each year and what the new tariff structure will mean for large consumers, no later than 2027,“ said Bohuslav Čížek of the Confederation of Industry. He stressed that predictable prices and preventing further significant increases are crucial for Czech industry. Čížek also reiterated the Confederation’s call to reduce the levy on supported energy sources (POZE) to at least its 2021 level.

The Czech Chamber of Commerce also wants to wait for developments in prices, POZE and the tariff structure before assessing the rules. „At the Chamber of Commerce, we recognize the need for substantial investment in network infrastructure over the next five years, and therefore understand how the methodology’s parameters have been set,“ said Zuzana Krejčiříková, chair of the Chamber’s energy section. She described, for example, incentive bonuses linked to returns for network operators as appropriate.

Energy prices consist of a commercial component set by suppliers and a regulated component administered by the state. The regulated component currently accounts for about 40 percent of the final electricity price for households, while its share of the gas price is around 20 percent. For large consumers, the regulated component accounts for a smaller share of the final electricity price.