Czech energy regulator seeks to spark fall in gas prices for households

Czechs could be forgiven for being confused about how to get the best price for natural gas since the market was flooded with offers from dozens of traders and sellers since it opened up over the last decade. The national energy regulator has now stepped in with a helping hand after its probe uncovered huge price variations.

Photo: Tomáš Adamec, Czech Radio

The Czech national energy regulator has long suspected that Czech households were missing out on the steep drop in gas prices. Spot prices have slumped to around a third of what they were around three or four years ago. And its probe of the local offers to customers appears to have backed up its suspicions that many Czechs were not getting the best deal.

The regulator though faced a fundamental problem; it has powers to police just a small part of the final bills for customers, covering gas distribution, storage, and other costs but not the price paid for the basic commodity itself which usually comes in at around 80 percent of the overall total.

In a bid to help Czechs get a handle on what they should be paying though, the regulator is now going to publish indicative prices which will be updated every quarter. It has already found that 70 to 80 percent of current charges for basic needs such as using gas for cooking or heating are above its first batch of indicative prices.

Vladimír Outrata is a deputy head at the regulator and says that the differences between the prices it recommends and those in effect are considerable and the possible annual savings to consumers substantial if they choose to react:

“We estimate that it could be between 5.0 billion crowns and 8.0 billion crowns the difference between this indicative price and what is offered on the official tariffs.”

The office reckons that the annual value of the Czech household gas market is around 30 billion crowns a year, so the potential for savings could come in at somewhere between 15 and 25 percent.

Photo: adamo / FreeDigitalPhotos.net

The real savings are unlikely to be nowhere near such levels. One reason is that some many Czechs are already locked into fairly long term gas purchase contracts of perhaps three to five years which they cannot easily get out of. A small fraction of the prices might be better than the indicative ones, and in spite of the regulator’s best efforts, inertia will always be a big factor with many customers reluctant to switch suppliers.

Still, the regulator does expect what it describes as its courageous move to have a quick and discernible impact on the market. And it is looking at the local electricity market as well with a view whether similar indicative prices these might be appropriate as well.

The Czech Republic is currently the odd man out in Central Europe with the national energy regulator having minimal powers over the final price of gas for households. But given its experience this time round the regulator has made no secret that it would like to see its powers boosted so something along the lines of maximum charges could be set some time in the future.