Czech government prepares to counter further energy price rises, bill gives it free rein to intervene

The government today approved an amendment to the Energy Act that would allow it, in the event of further sharp increases in energy prices, to regulate electricity prices for consumers and cap excessive revenues earned by electricity producers. The government could then use a levy on part of these revenues to cover the state’s costs of addressing the energy crisis. Industry and Trade Minister Karel Havlíček (ANO) said this at a press conference after the government meeting. The amendment does not introduce regulation automatically. According to Havlíček, the bill, which will now go to the Chamber of Deputies, is intended to enable the government to respond quickly to future market developments.

Energy prices have been rising since this spring as a result of the conflict in the Middle East. Gas and electricity prices have risen by tens of percent since March. Domestic suppliers are gradually reflecting the increases in their price lists.

"We are preparing in advance so that we can act quickly if energy prices rise sharply again," Havlíček explained, giving the reason for the amendment to the Energy Act.

According to him, the approved proposal is based on a crisis plan that the government discussed with representatives of the domestic business sector in the spring.

The approved proposal is intended to allow the government, in an exceptional market situation, to contribute from the state budget towards some of the costs of energy networks. According to Havlíček, this would create room to reduce the regulated component of the price paid by households and businesses on their energy bills. This measure could also be combined with a levy on part of electricity producers’ excessive revenues. The minister said the state could then use the levy proceeds to cover the costs of reducing regulated prices.

The opposition Civic Democratic Party (ODS) is not criticizing the government’s proposal in advance, party chairman Martin Kupka said; its position will depend on the mechanism chosen. It is good to have an effective tool ready in case of dramatic increases in energy prices, he told reporters. According to the chairman of the opposition Pirates, Zdeněk Hřib, rising energy prices are not unexpected and the government’s proposal amounts to emergency assistance. The cabinet is not investing enough in energy savings and renewable sources, which are the way to ensure affordable energy in the long term, he told reporters.

The government of Petr Fiala (ODS) introduced a levy on producers’ excessive revenues during the energy crisis in 2023. However, the rules at the time were tied to the energy crisis of 2022 and 2023. The amendment will replace them with a permanent legal framework setting out procedures for any further exceptional market fluctuations.

The amendment approved today does not automatically introduce price caps or trigger levies. According to Havlíček, their use will be conditional on an exceptional market situation and state measures to mitigate energy prices. In such a case, the government would decide on the specific design, taking into account current price developments and the costs of different types of electricity generation.