The Czech government approved the price ceiling for electricity and gas

The Czech government approved the price ceiling for electricity and gas

Electric pylons carry power from the CEZ Ledvice coal-fired power plant near the village of Ledvice, Czech Republic, Feb. 9, 2016. REUTERS/David W Cerny

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PRAGUE, Sep 12 (Reuters) – The Czech government on Monday agreed to cap electricity and gas prices next year to protect households from a surge in market prices, Prime Minister Petr Fiala said.

The Czech Republic, like other European countries, is scrambling to protect people and businesses from electricity price spikes amid cuts in Russian gas supplies to Europe following Russia’s invasion of Ukraine and European sanctions against Moscow.

The Czech government has said it will make its national plan, which is subject to parliamentary approval, along with a pan-European decision, which is being prepared by the European Commission and member states.

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“We guarantee the price level, everyone will know how much they will pay, and it will be impossible for someone to pay a multiple of what they paid this year,” Fiala said at a press conference broadcast live by the CTK news agency. .

Fiala said prices for households would be capped at 6 kroons ($0.2476) per kilowatt-hour for electricity and 3 kroons for gas, and the change would have to be made from November deposit payments.

The price of electricity is further increased by network services not included in the limit.

He said a decision to combat high prices for the industry would be made public on Wednesday.

Adjusted for taxes, the price cap for electricity in the Czech Republic corresponds to about 200 euros per MWh, the price level mentioned in the European Commission’s price cap proposals for non-natural gas generators.

This is well above the prices of previous years, but also well below the Monday market prices for delivery to Germany in 2023, which were 479 euros.

The government also guarantees that the public sector, including hospitals, municipalities or schools, will have guaranteed supplies at the same prices.

Finance Minister Zbynek Stanžura said the restrictions would cost the state 130 billion crowns ($5.36 billion) next year.

The restriction is to be funded by a windfall tax the government is planning on energy companies, refineries, banks and fuel and electricity merchants, which Stanjur said could raise about 70 billion crowns ($2.89 billion) next year.

The extra money will come in the form of dividends from state-owned companies and sales of carbon credits, he said.

($1 = CZK 24.2350)

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Reporting by Jan Lopatka; montage by Jonathan Oytis and Aurora Ellis

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