Sokolovská uhelná to raise heat prices in Czechia, mainly due to emissions allowance costs

Sokolovská uhelná will raise the price of heat it produces at the Vřesová complex and Tisová power plant in 2024. Prices are expected to rise by 20 to 25 percent. In a press release today, the company attributed the increase mainly to emissions allowance prices, which it says currently account for more than 50 percent of the cost of heat production. Sokolovská uhelná is the largest heat producer in the Karlovy Vary Region, supplying Karlovy Vary and its surroundings, Sokolov, Nové Sedlo and Chodov, as well as Bukovany, Citice and Březová.

Even after the increase, the company says, the price of coal-fired heat will remain lower than that of heat produced, for example, from natural gas. Sokolovská uhelná and Tisová Power Plant, which is owned by the company, have not made any significant changes to heat prices over the past two years, but the company says an increase is necessary for next year. The main reasons are rising costs for emissions allowances, an expected increase in the levy on extracted minerals and other costs imposed by the state on heat production.

„In 2022 and 2023, we tried to absorb most of the costs of heat production and supply ourselves, which meant that the price of heat did not cover the actual rise in costs. Given the current situation, however, this is unsustainable, so we cannot avoid changing the price for our contractual partners, to whom we produce and supply heat. The main reason is the cost of emissions allowances, which accounts for more than 50 percent of the cost of heat production before it is handed over for distribution to end consumers,“ said Pavel Tomek, chairman of the supervisory boards of Sokolovská uhelná and Tisová Power Plant.

Coal-mining operations, including labour costs, now make up a smaller share of the price. The price also includes the costs of maintaining and managing mining technology, investment in coal-fired units, dispatching and, last but not least, the increase in the levy on extracted minerals paid by the company to the state. For end customers—most often households—the final price of heat is set by municipal or town heating plants and companies that operate heating systems.

For example, the municipal company Sokolovská bytová is charging households 803 crowns per gigajoule, including VAT, for heat this year. Compared with 2022, the price has risen by 15 percent, or 97 crowns. A typical household consumes 25 to 35 GJ of heat a year. At this year’s prices, that amounts to roughly 20,000 to 28,000 crowns annually. If local distributors pass on the full Sokolovská uhelná price increase to customers, then in Sokolov, for example, the price of heat next year would approach or exceed 1,000 crowns per GJ, raising annual household costs for heat and hot water to 25,000 to 35,000 crowns. Sokolovská bytová has not yet announced its final price.

Sokolovská uhelná and its subsidiary Tisová Power Plant produce heat and supply it to distributors, including KAREL HOLOUBEK – Trade Group, its Teplárna Karlovy Vary branch, Sokolovská bytová, Teplo Chodov, Služby města Březová, TEBYT Bukovany a Citice, HATESPO in Habartov and Novosedelská bytová.

„We are gradually discussing the price increase with all of them and clarifying its final level for 2024. We are trying to explain the reasons for the increase, which we can substantiate with all the relevant data. The final price for customers will be affected not only by higher heat production and supply costs, but also by the cost of operating the heat distribution network, which distributors will add directly to the price. Even after the increase, however, the cost of producing and supplying lignite-fired heat will remain a third lower than the cost of producing heat from gas,“ Tomek added.

Within Sokolovská uhelná, Tisová Power Plant and the Vřesová complex supply heat to distributors in the Sokolov and Karlovy Vary areas. Together, they deliver around 2.2 million GJ of heat a year to the public network.