Government approves energy price caps for large businesses

Starting next year, large firms will start paying capped prices for electricity and gas usage, following a government ruling yesterday. The move, as reported by ČT24, is intended “to motivate businesses to save” and aims to safeguard energy firms against spiraling energy costs.

The price caps for large companies will come into force in January.

In the fall, the government had set price ceilings that applied to households and small enterprises. These price caps – of CZK 6,000 per one megawatt (MWh) hour of electricity and CZK 3,000 per one MWh of gas – will now be extended to large companies.

It is estimated that price ceilings implemented for all consumers will cost the state CZK 170 billion.

Under the EU framework for assisting businesses, large firms are also able to combine the price caps with subsidies issued by the government – provided that they do not exceed EUR 4 million (almost CZK 100 million). 

The vice president of the Czech Union of Industry and Transport, Jan Rafaj, welcomed the ruling. According to him, without a ceiling “Czech companies would get into serious problems and their competitiveness within Europe would be significantly reduced,” ČT24 writes.

To illustrate the difference in price, a Czech branch of car-component manufacturer Grammer paid CZK 50 million for its energy bills in 2021. This year, the total is about CZK 120 million, according to director of Czech operations Martin Kořínek. 

Some critics, however, say that the price ceiling is inadequate: former Trade Minister Karel Havlíček said that the ceilings do not go high enough.

The government has also said that it will finance the price ceilings via a recently implemented windfall tax on large corporations (some of which will also happen to benefit from the energy price caps).

Such price caps on large companies are uncustomary and as such required special approval from the European Commission. “We have acted intensively since the beginning of the energy crisis and tried to negotiate an exception to these rules... it is proof that we can promote the interests of our citizens at the EU level,” Minister of Trade and Industry Jozef Síkela stated at a press conference yesterday.

On the topic of EU-wide gas price caps set by the bloc, Czech Prime Minister Petr Fiala yesterday reaffirmed his support of price ceilings, stating that Czechia – as current Council of the EU president – may override Germany’s opposition to them. Talks on further ceilings will continue into 2023.