As the Czech government’s caps on energy prices are set to expire at the end of the year, customers with long-term fixed rates above the government’s ceiling may experience a sudden surge in prices. One of the largest domestic suppliers, ČEZ, has taken a proactive step to address this concern by announcing that customers in this situation will have the option to switch to a lower tariff.

Throughout this year, ČEZ’s customers will be protected from paying more than the current price ceiling for energy. The company plans to contact these customers gradually and repeatedly, using email, SMS, or phone calls, to inform them of their options. Customers will be allowed to switch to an actively fixed product with declining prices without incurring any penalties. This will help them avoid charges above the government’s price ceilings in the following year.

The Czech government had imposed a cap on electricity prices at CZK 6,000 per megawatt-hour (MWh) including VAT for the entire year, while the maximum price for gas consumption was set at CZK 3,000 per MWh with VAT. It’s important to note that these prices exclude distribution fees.

Despite wholesale energy prices remaining significantly below the price caps for several months, the government is not expected to extend the caps. This situation poses a potential challenge for consumers with long-term fixed rates at higher prices.

ČEZ has offered a solution to its customers by allowing them to switch to a tariff with gradually decreasing prices. In the first year of the fixed rate, electricity and gas will be offered at approximately CZK 510 per MWh, which is cheaper than the government’s limits. The prices will continue to decrease in the subsequent years. According to ČEZ, households that make this switch can save up to CZK 8,000 per year on their electricity bills. For customers using fixed-rate gas for heating, the potential annual savings can reach up to CZK 27,000.

The Minister of Industry and Trade, Jozef Síkela (STAN), welcomed ČEZ’s decision, stating that the company had responded to his informal appeal. The minister expressed satisfaction that around 160,000 customers would pay less for energy next year, avoiding significantly higher amounts if the government caps were lifted.

Other energy providers, such as Innogy, are also working on solutions for customers with fixed rates. Innogy is expected to present its proposal in the coming weeks. The issue affects approximately 400,000 customers across the energy market, with Innogy accounting for around one-tenth of the total customer base of 1.7 million.

Prague Energy (PRE) confirmed that they have not been offering fixed-price products since autumn 2021. They emphasized the long-term disadvantage of fixing prices at a high level and reintroduced a fixed-price product below the government’s ceiling in their offerings in March 2023.

Article by Prague Forum