Business Plans for rebalanced electricity charges spark furious debate

29-02-2016 14:30 | Chris Johnstone

Leaders of the government coalition parties on Monday will debate the thorny question of how to rebalance the costs of electricity supply between different categories of Czech households and businesses. An outline proposal for changes from the national energy regulator has resulted in an avalanche of criticism with one option now to go back to the drawing board.

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Photo: ČT24Photo: ČT24 Most experts agree that the old national formulas for energy production and distribution are facing a fundamental shift. The traditional model for the last half century or so has been for big power companies to produce large amounts of power at a few massive plants and ship it round the country via high voltage and local grids. Almost everybody pitched into the payments for the maintenance and development of the national and local transmission grids.

But the new trend is for a lot more local power production from solar power panels on roofs, biomass production, and small hydro plants. Even some of the big Czech energy players such as electricity giant ČEZ and gas company RWE are now offering packages for households to install solar panels.

Photo: Kristýna MakováPhoto: Kristýna Maková The result is that these local power producers will be paying a lot less for electricity and making smaller contributions as a result under the current system for the upkeep of the national power network. But they will still be making intermittent demands on the grid for power when their own production flags or for selling on excess electricity.

And it was with that unsustainable trend in mind that the national energy regulatory office, ERÚ, launched its consultations about a new share out of the electricity and distribution burden in January. If the aim was to spark a debate, it has certainly happened.

The problem for the energy regulator is that its basic proposal to shift the payments burden to small and irregular electricity users appears in practice to penalize the large number of Czechs with second homes, and those living on their own such as the elderly, single mothers, or students. Most of the latter fall into the low income category. Environmentalists complain it’s a formula favouring heavy energy users.

Bohuslav Sobotka, photo: ČT24Bohuslav Sobotka, photo: ČT24Prime Minister Bohuslav Sobotka complained recently that this appeared to be formula for Robin Hood in reverse:

“The proposal will reduce the motivation to save electricity on the part of consumers. Paradoxically, it could also result under this new payments system that financial resources will be transferred from the poorest to the richest.”

A preliminary evaluation of the proposed new charging system from 2017 by the Ministry of Industry and Trade found it could increase charges for around 38 percent of households and for 91 percent of companies that are low electricity users.

Photo: European Comission Photo: European Comission Politicians now have to work out whether the consultations about the changes continue as planned until the end of June, whether a time out is called for further reflection, or the whole exercise be dumped and everything started again from scratch.

The under fire regulator has pointed out that it was just following orders when it came up with the proposals and that government experts were fully involved in the consultations although they now appear to have run for cover.

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