How much could govt. price caps save households and will it be enough?

The caps could mean savings of tens of thousands of crowns for households but the opposition says the measures don't go far enough. Staff

Written by Staff Published on 13.09.2022 10:08:00 (updated on 13.09.2022) Reading time: 3 minutes

Prime Minister Petr Fiala expects the lower house of Czech parliament at its Friday session to approve the government’s measures to cap soaring energy prices. The measures will be handled in an expedited process, and if passed would take effect as early as November.

While the government says the steps will mean savings of tens of thousands of crowns for households, the opposition says it is not enough.

Nonetheless, Fiala expects the opposition parties to back the proposals. "I expect the Chamber of Deputies to approve our proposals as they are very important," Fiala said.

The government announced last night that it would set maximum prices for energy and gas. Fiala said the chosen solution was the best, most suitable, and most efficient.

The Czech government set a maximum price of electricity and gas at its meeting last night, with households and sole traders to pay CZK 6 per kilowatt hour (kWh) of baseload electricity including VAT at most and CZK 3 per kWh of gas at most.

Self-rule authorities and public institutions will pay the same price when buying electricity and gas via the state energy trader. Measures to support large industries are being discussed separately.

According to the examples shown by the government during a press conference, households can save up to tens of thousands of crowns per year. The amount of savings depends on the volume and type of energy the household uses.

The typical annual electricity consumption of households is 1.9 Mwh, according to the government’s models that were published by CNN Prima. Customers would pay approximately CZK 1,508 per month including tax next year, with the caps in place. Without caps, it could be as high as CZK 3,199 per month. Households that cook with gas would pay CZK 283 per month with caps and CZK 408 without caps. Households that heat with gas would pay CZK 5,993 with caps and 11,913 without.

The price caps will be enabled by an amendment to the energy law based on an "urgent market situation," Industry and Trade Minister Jozef Síkela said.

On Friday, the coalition government wants to debate the proposal in a state of legislative urgency. The Senate is to debate the legislation next week. If it passes both houses of parliament and is signed by President Miloš Zeman, it will take effect by being published in the Collection of Laws.

The opposition said the government had set the prices of energy and gas too high. ANO first deputy chairman Karel Havlíček called the plans a big disappointment. He told the Czech News Agency that capping the prices was the right step, but the measure was obviously prepared haphazardly.

Havlíček said the cap means that the price will not be, say, 15 times higher. "But if someone bought it two years ago, this will be four to six times higher for electricity and even higher for gas. The government is only testing what the people can sustain," Havlíček said.

Tomio Okamura, the leader of the opposition Freedom and Direct Democracy (SPD), said the government measure is insufficient and comes too late, only pressure from the opposition.

Okamura also said the cap for gas was extremely high. "Until last year, the price was about CZK 0.70 for one kWh. So capping it at CZK 3 is extremely much," he added.

According to the SPD, cheap gas directly from Russia should be agreed on for this winter. "For the future, the Czech Republic's energy security should be ensured and sources should be diversified so that we do not depend on a single producer," Okamura said.

It is a tragedy that the government has refused to negotiate for cheap gas directly, he added. "We prefer to buy Russian gas at an exorbitant price through the German dealers," Okamura said.

Would you like us to write about your business? Find out more