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News

Energy regulatory office published pricing decisions for the energy and gas industry in 2020

12.12.2019
Company: bpv Braun Partners s.r.o.

On November 28, 2018 the Energy Regulatory Office (“ERO”) posted to its website three new pricing decisions setting the regulated prices for 2020 for (i) related services in the electricity sector and other regulated prices and (ii) services in the electricity sector to customers from low voltage networks and (iii) prices related to natural gas supply

All three pricing decisions are set to take effect on January 1, 2020. 

Compared to 2019, when the vast majority of prices increased for large customers, households and small businesses alike, many by quite a bit, the pricing decisions for 2020 anticipate in most cases price increases that are less than the inflation rate. In practical terms this means that while in the electricity sector the regulated part of the price will increase by an average of 0.7% for very high voltage, by 1.7% for high voltage, and by 1.5% for low voltage, households will see an average increase of 1.3%. 

The good news for electricity consumers is that despite the increasing volume of aid for promoted energy sources, the component of the price for promoting renewable energy is set to decrease once again in 2020. 

1. connected to the transmission grid or the distribution grid at VHV and HV, the given component of the price of electricity is dropping from CZK 58,944.64/MW/month (in 2019) to CZK 57,674.52/MW/month, and 

2. for places connected to the distribution grid at LV based on the rated current value of the main circuit breaker before the meter and all distribution rates, the given component of the price of electricity is dropping to CZK 13.27/A/month (as compared to CZK 13.56/A/month in 2019). 

However, the limit on the maximum amount the customer will pay for the promoted energy sources fee for the billing period still applies. The maximum amount is designated as CZK 495 multiplied by the total volume of electricity in MWh taken from the grid during the invoice period. 

The regulated components will not be increasing in 2020 as much as the non-regulated component of the price of power. 

The regulated price components for natural gas mostly increases by less than one percent in comparison with 2019. The greatest price increases will affect customers in the distribution area for Prague. 

The ERO also posted on its website the indicative prices for natural gas for the first quarter in 2020 (“Q1/2020”). 

Indicative prices for natural gas are non-binding prices recommended by the ERO. The ERO introduced the publication of indicative prices for natural gas at the end of 2016 in response to fact that prices for natural gas in offers from natural gas traders were decreasing more slowly than expected, given developments in natural gas prices on world markets. As the ERO states on its website: “After introducing indicative prices the [natural gas] market saw repeated and significant price cuts. Indicative prices have caught on as an indicator in certain price comparison tools. Consumer and other organizations are reporting on them, showing that they are well received by the professional community and general public.” 

The ERO set the price for natural gas supply for Q1/2020 as follows: 

Nature of consumption                                                              Indicative prices (CZK/MWh) 

Cooking (consumption 0-1.89 MWh)                                        CZK 945/MWh. 

Heating water (consumption 1.89 – 7.56 MWh)                       CZK 795/MWh 

Heating (consumption 7.56 MWh and higher)                          CZK 745/MWh 

source: www.eru.cz 

The recommended commodity prices for natural gas thus take a slight decline as compared to Q4/2019. 

As we have pointed out in the past, growth in regulated components does not necessarily mean an equivalent growth in the overall price of electricity or natural gas. Regulated components make up only part of the final price for energy. This means that customers always have some possibility to compensate for the overall growth in energy prices by purchasing more suitable commodities (electricity and natural gas) from suppliers, although this is becoming less and less tenable given the major increases in commodity prices.

http://www.bpv-bp.com/download/newsalerts/energy_regulatory_office_published_pricing_decisions_for_the_energy_and_gas_industry_in_2020.pdf

Tags: Law |

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