It is clear that the government will be able to set the upper bound on electricity and gas prices for customers in the event of an unusual situation in the market. An energy law amendment, which would allow it to do so, was approved by the House on Friday in an accelerated mode. It must now be debated by the Senate and signed by the President. The government wants to limit the price of electricity to six kroner per kilowatt-hour for electricity and the price of gas to three kroner per kilowatt-hour for small customers.




Prague

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All 153 current MPs from all parliamentary clubs voted in favor of the law (illustrative image) | Photo: Rene Volvik | Source: iROZHLAS.cz

The new law responds to the recent rise in energy prices. All 153 members of Parliament from all the clubs of Parliament voted in favor of the law.

In order to limit the prices, the government will have to issue a regulation which will specify the details i.e. basically the maximum price. This will be the subscription range to which the price cap will be applied and the categories of customers to which the price cap will be applied.


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Suppliers will be entitled to compensation for demonstrable losses and reasonable profits.

As part of the exceptional market situation, the government will be able to ban, for example, the trading of electricity and gas on stock exchanges as a last resort.

Industry and Trade Minister Joseph Sekila (for the Stan Center) promised to the deputies that the government will issue a price list as soon as the amendment enters into force.

Finance Minister Zbyněk Stanjura (ODS) said earlier that the budget impact of the capping dam would reach a maximum of 130 billion kroner.

According to him, the state will use the income collected from all state-owned enterprises, the tax prepared on extraordinary profits and income from emissions allowances for costs.

The opposition is not cheerful

The opposition mainly criticized the government for its inability to solve the energy crisis and accused it of being late. She also criticized that the government does not listen to her.

Because of the voting procedure, most of the opposition’s amendments, especially those that introduced the maximum rate directly into the law, were not decided upon.

Minister Sekila said it makes no sense to include a price cap in the law, because the law will apply even after the crisis is over, and if the cap is used again, the entire law will have to be amended. He said government regulations are more flexible.


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Alina Shelerova, Chairman of the Board of Directors of the ANO Club, said after the vote.

SPD club president Radim Fiala said the ceiling, which is not precisely defined in law, would be too high.

Only Minister Stangora succeeded in the amendment. On his proposal, the House removed from the amendment, among other provisions, that the upper limit set by the government would also cover regular payments to small customers.

According to Stangora, the government will specify this in its regulations. According to his proposal, the government will also be able to specify the range of costs authorized for electricity and gas suppliers in the regulations for the purposes of calculating compensation for demonstrable loss and reasonable profits.

Protecting vulnerable customers

The amendment will allow consumers to more easily terminate such a contract containing the so-called spot prices, i.e. prices derived from developments on the stock exchanges. The Bureau of Energy Regulation warns against such contracts.

The government says the measure is designed to effectively protect vulnerable clients from contracts that may be subject to price fluctuations due to market volatility.


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Only consumers, not businesses for example, have the right to terminate the contract at spot rates during the month. This will apply to both fixed-term and indefinite-term contracts.

If there is an agreement in the contract that allows the supplier to change the agreed price of electricity or gas to a price based on developments on the exchange, without the express consent of the consumer, then this agreement will not be taken into account.

The Senate is supposed to consider amending the law on Tuesday. If he agrees to it, then President Milos Zeman will sign it.

Minister Sekila said on Friday that once the amendment passes the legislative process, the government will issue the appropriate regulation.

The government will be able to issue a proper regulation on the maximum prices in case of an unusual situation in the market. The approved modification does not know it.

In the explanatory report of the previous amendment to the Energy Law as of this summer, which introduced a savings tariff for households, the government defined it as follows.

“Exceptional market situation is understood as a situation in which a large part of the country’s citizens suffer from serious financial problems as a result of high electricity or natural gas prices, and this situation is not possible, sufficient or suitable to be resolved with another type of state aid, such as housing allowance.”

CTK

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