Stopping supplies through Ukraine will make gas more expensive for hundreds of thousands of Czech households

During the last ten days, the price of gas jumped by about ten percent on the Prague Energy Exchange. And according to Gavor, over one hundred thousand customers have monthly price fixation or tariffs linked to the current prices on the stock exchange. “Those with spot prices feel it already, customers with monthly fixation will feel it at the next monthly bill,” he said.

The price increase will not yet affect the rest of the customers, i.e. those with a fixed or indefinite contract.

“I was a bit shocked when it was presented as if it did not concern us. Yes, it is mainly a problem for Slovakia, which will suffer direct financial losses. But it will have an impact on the wider region. When fifteen billion cubic meters of cheaper gas suddenly disappear from the market and it is necessary to replace it with the same amount of more expensive gas, it must have an impact on prices,” Gavor told Novinkám.

It made gas even more expensive at the key European trade hub TTF in the Netherlands. “Last February, prices ranged between 30 and 35 euros per megawatt hour, in October they already exceeded 40 euros and now they exceed 50 euros, i.e. about 1250 crowns,” Tomáš Vrňák, an energy expert from Ušetřeno.cz, told Novinkám.

And how much will the affected families pay extra? “An increase in commodity prices by a tenth means an increase in the total price for households by 7.5 percent,” said the analyst. For households in a family house, which cook and heat with gas and consume about 3,000 cubic meters per year, this means an increase in payments by about four thousand crowns per year.

According to Gavor, price lists for contracts for an indefinite period have been expensive compared to fixed-term products, which is why large suppliers in particular have made gas cheaper since January. “And now they won’t immediately announce that the price will rise again. They bought gas in advance and are now buying it for next year at higher prices. It can be reflected there,” he explained.

Vrňák expects a faster rise in prices. “Current gas fixations with a price of around CZK 1,300 per megawatt hour are unsustainable in the long term. The price increase will probably come during this quarter. Some suppliers bought gas more advantageously in the past, but these supplies will run out sooner or later,” he said.

If the market prices of gas do not change much, he estimates that in the middle of the year, gas prices may rise to a level of around 1,500 to 1,630 CZK per megawatt hour, i.e. by up to a fifth.

“Suppliers’ prices may be temporarily lower than on the stock exchange, which represents an opportunity to conclude a fixation ideally for two to three years,” stated Vrňák.

Marek Vošahlík, spokesman for the Ministry of Industry and Trade, pointed out the drop in prices from large suppliers since January.

“The end of the transit through Ukraine was a fact foreseen for a long time and the Czech Republic was preparing for it. Changes in gas flows and associated risks have already been taken into account in the gas price in recent months. Electricity and gas prices have been falling since the beginning of the year. The successful abolition of the German transit fee also contributes to the reduction of gas prices,” he told Novinkám.

But Gavor stated that the increase in prices on the stock exchange is much higher than the aforementioned fee for gas transit, which was applied by Germany until the end of last year in the amount of 2.5 euros per megawatt hour.

The loss of fifteen billion cubic meters per year represents less than five percent of Europe’s annual consumption and can be replaced by imports from elsewhere, but the effect on prices will be higher in our region.

“The European market is not fully homogeneous. It would have to be perfectly connected by gas pipelines, which it is not. There are price zones, and even before the stoppage of gas supplies through Ukraine, prices in Central and Eastern Europe were higher than in Germany, Belgium or the Netherlands,” added the analyst.

But he is not worried about the lack of gas. Although stocks are now lower than the EU average, from a long-term perspective their condition is not bad.

Tanks became more empty partly because gas prices started to rise at the end of last year and some traders speculated that they would buy more cheaply in the new year. According to Gavor, it was calculated that the flow of gas through Ukraine might be maintained, which would mean a drop in prices.

Thus, less was imported and more was drawn from reservoirs. They are now about 63 percent filled, last year it was 88 percent. “But I can rule out a situation where there would be nowhere to bring it from. I rather think that by the end of the heating season there will still be a reserve left in the reservoirs,” added Gavor.