Czech energy regulator plans sharp increase in fees for gas transit through Czechia

The Energy Regulatory Office (ERÚ) is planning a sharp increase in fees for gas transit through Czechia from 1 January 2024. Ekonomický deník reported this today. The move will help gas transmission operator Net4Gas, which is losing revenue because less natural gas has been flowing through Czechia since the Nord Stream pipeline was shut down, the publication said. The impact on prices for Czech customers should be negligible, with the regulator estimating it at 1.50 korunas per megawatt-hour, or around one-thousandth of the final price, the website reported.

„The Energy Regulatory Office has already announced the start of a public consultation on its draft price decision on regulated gas prices in May, unusually early. The change will take effect on 1 January 2024,“ the website reports.

According to ERÚ spokesperson Michal Kebort, the draft price decision responds to exceptional circumstances on the gas market, where the war in Ukraine has caused significant changes in gas flows across Europe. „The proposed prices were set by comparing tariff levels in other countries, to ensure that the Czech Republic remains competitive in gas transmission,“ the spokesperson said.

Under the new price lists for gas transmission, for example, the price at the main entry point for Norwegian or other gas, in Brandov in the Ore Mountains, will rise by 57.5 percent to 1383,48 korunas per megawatt-hour (MWh) and day. ERÚ estimates the impact on prices for Czech customers at around 1.50 korunas per MWh, or around one-thousandth of the final price, Ekonomický deník reports. For comparison, it notes that before the energy crisis, Czech customers paid around 500 to 1000 korunas/MWh for natural gas, while this year suppliers are charging between 1900 and 2900 korunas/MWh (including distribution and fixed fees, excluding VAT).

Under the proposal, exit fees for gas flowing through the Czech system to another country will also rise by around 57 percent compared with this year’s price list. However, they will not affect prices for Czech customers.

The owner and operator of the backbone gas pipeline network, Net4Gas, is seeking the price increase. „Yes, Net4Gas is seeking higher gas transmission rates, similar to the increases already introduced this year by transmission system operators in Germany (a year-on-year tariff increase of 72 percent),“ the transmission operator’s spokesperson Vojtěch Meravý told the website. He said the reasons were the effects of the energy crisis linked to the war in Ukraine, a decline in gas transit flows through the Czech Republic, lost revenue and the failure of the dominant Russian state-owned gas supplier to meet its contractual obligations.

Last June, Russia cut supplies through the Nord Stream 1 pipeline, which carried Russian gas along the bed of the Baltic Sea to Germany, to 40 percent of capacity, and in July reduced them further to 20 percent. Since September, Russia has supplied no gas through the pipeline, which was also damaged.

Despite a year-on-year decline of 40 percent in total gas transmission, Net4Gas reported record results last year. Consolidated revenue rose by a quarter year on year to 12.95 billion korunas, while Net4Gas’s net profit climbed by almost two-thirds to 6.24 billion korunas.