Energy firm offers consumers prize freeze for 2010

Consumers fearful of rising energy prices have now been offered a choice by the Czech energy giant ČEZ: the possibility of freezing electricity prices through 2010. Not long ago ČEZ came under fire for an announced 10 percent electricity price hike, and this is its answer to critics. Anyone wishing to avoid a further rise in two year’s time, can now sign up. The question is, will it be worth it? The international financial crisis is likely to see energy prices drop before they go up. As a result, anyone signing up for the freeze now could end up with the higher bill.

You can either gamble or opt for a sure thing: that is the choice currently being offered consumers by Czech energy giant ČEZ. On Tuesday, the company offered the option of a price freeze for 2010 based on the current rate on the Prague Energy exchange. Consumers have until February to sign up. But there’s a catch: electricity prices could go down in the future, a scenario which is likely, say some analysts. Ultimately, anyone who gambles to try and get a better deal, could end up paying more. Jiří Chvojka, of the SPONEL initiative against high energy prices, is highly critical of ČEZ policies:

“I think this is an attempt to divert attention from the fact that prices will increase by 10 – 15 percent next year, which amounts to a rise of almost 50 percent for businesses over the past two years, a hike that is unsubstantiated… Nobody here is controlling ČEZ’s profit margin in what basically amounts to a monopoly.”

But others have come out in defence of the ČEZ plan – which was negotiated with the ministry of trade - saying a stable fixed rate, even if ultimately higher, is preferable for many companies putting together their long-term business plans. The head of the Czech Chamber of Commerce Petr Kužel:

“Our businesses will be able to avoid a jump in prices in 2010. They will be able to choose how much they are willing to pay and be ready for it.”

ČEZ representatives themselves have insisted that the cost of electricity in 2010 will almost certainly be higher than in 2009 and say that it makes good sense for consumers to sign up for the freeze. Others aren’t so certain, arguing that ČEZ should not have hiked prices at a time when the cost of energy should logically be going down. In their view, the latest plan is little more than a ploy from which ČEZ once again stands to profit, and the harshest arguments go that anyone signing up for the price freeze is only being duped.