Bohemia Energy is bankrupt. Czechs needn’t worry about gas & electricity supplies (just skyrocketing prices)

Until its abrupt closure on Wednesday, Bohemia Energy was the largest alternative energy supplier in the entire Czech Republic, serving nearly 1 million customers. The company said it was “forced to take the drastic step” on shutting down due to the rapid, extreme growth of wholesale power prices. The Czech energy market now faces an unprecedented situation: for the next six months, so-called “suppliers of last resort” must serve affected households.

Until its abrupt closure on Wednesday, Bohemia Energy was the largest alternative energy supplier in the entire Czech Republic, serving nearly 1 million customers. The company said it was “forced to take the drastic step” on shutting down due to the rapid and extreme growth of power prices on the wholesale market. The Czech energy market now faces an unprecedented situation: for the next six months, so-called “suppliers of last resort” must serve affected households.

“The only thing we have to fear... is fear itself” – Franklin Delano Roosevelt famously said in his inaugural address as president of the United States. His speech came midway into the Great Depression, when economic decline had pushed world trade to a third of its level before the Wall Street Crash of 1929.

Addressing the Czech public following the collapse of Bohemia Energy, Prime Minister Andrej Babiš adopted much the same tone. “The most important thing to know is that people do not have to worry”, he told a hastily called press conference on Wednesday.

Photo: Gundula Vogel,  Pixabay,  CC0

The Czech prime minister then called on suppliers to ensure no-one suffers from the current energy crisis, and for the Energy Regulatory Office to consider capping prices for Bohemia Energy’s former clients. He has further proposed energy tax cuts from the current 21 percent to zero.

Meanwhile, former Bohemia Energy customers do have to sign a new contract with one of the “suppliers of last resort” – but neither can they choose which company takes over the services for the next six months.

The “suppliers of last resort” are the German companies E.ON and Innogy, or the municipal Prague electricity and gas companies, PRE and Pražská plynárenská, and – the largest by far – state-controlled power utility ČEZ.

ČEZ spokesman Ladislav Kříž said the utility can take on some 400,000 former Bohemia Energy customers, but acknowledged that all suppliers will need to strengthen their capacities.

“ČEZ is ready to step in as a ‘supplier of last resort’. We have performed this task several times in the past. Although those were smaller suppliers, we are, of course, ready to fulfil this role now. But, of course, we need to strengthen our current capacity.”

E.ON spokeswoman Martina Slavíková said the German giant is also prepared to take on the role, while essentially appealing for people to “keep calm and carry on” – and stop calling the company help line.

Photo: Federico Candoni,  Wikimedia Commons,  CC BY-SA 4.0

“In the coming days, we will focus on the [former Bohemia Energy] customers and handle them as a priority. At the same time, we would like to ask customers to be patient and not call us on already congested lines. We know about you, and we will take care of you – as quickly as possible.”

The larger problem, however, is a long-term one. As Bohemia Energy noted when announcing its “shutdown with immediate effect” on Wednesday, the price of electricity and natural gas is now a staggering three times higher than it was last year.

ČEZ spokesman Ladislav Kříž said it was in the utility’s interest that “also Bohemia Energy customers are satisfied with us and do not feel any punishment with electricity prices.” But as E.ON spokeswoman Martina Slavíková noted, prices will reflect the situation on European stock exchanges.

“This is because, for new clients, who come to us within the [legal] institution of ‘supplier of last resort’, we must buy electricity and gas on the market at current prices. And, as we all know, they aren’t exactly friendly.”

The price of electricity has risen on the stock exchange by 190 percent in the past 12 months. And heating is set to become significantly costlier this winter – with prices jumping by the most in annual terms in 13 years, not only due to rising gas and coal prices, but also greenhouse gas emission allowances – a tool to address another crisis: global warming.