Regulator Finalises Energy Prices for 2012

National regulatory authority URSO finally endorsed the prices of energies for next year, which means customers will be more out of pocket. Here provides you with an article on the subject from daily Pravda published today (Page: 1/10, Author: Michal Holeš)

Gas to go up by six percent

Burning a hole in your pocket (c) James Riden

Households will have to get ready for a greater hike in energy prices than was expected. The prices of gas, just like a year ago, will increase by an average of 5.5 percent, while larger houses will pay as much as six percent more. Electricity will go up by two percent instead of the expected one percent. The new prices were confirmed by the regulatory authority. What’s more, the prices of heat will go up by as much as seven percent and water by five percent.
The average household will therefore lose about ten euro more a month due to the growth in regulated prices. In addition to energy prices, a hike looks set to be seen again in 2012 in the prices of foodstuffs, clothing and consumer goods. The total gross expenditure of a four-member family with two children should therefore rise by about EUR 35 a month upon the projected inflation of 2.6%. The department of finance expects salaries to grow faster, even though this target could endanger the encroaching economic crisis.

The January hikes in energy prices might not be the last, though, because the regulatory authority has set prices optimistically. “The calculations included an exchange rate of USD 1.42 per euro”, specified head of the regulator Jozef Holjenčík (Smer-SD nominee).

Yesterday, however, the euro slumped to a yearly low due to the spreading crisis – to under USD 1.30. The weak euro makes the purchase of gas from Russia more expensive, and in July this year this was already responsible for a 7% hike in gas prices for households.

The department of finance expects the exchange rate in 2012 to be about USD 1.38 per euro and the National Bank of Slovakia expects an exchange rate two cents lower. The National Bank also expects that the average price of oil next year will be in the range of USD 109. The regulatory authority expects the price of oil products on the level as if a barrel of the black gold cost just one hundred dollars.
Estimating the price of oil is difficult, though. Analyst from Trim Broker, Ronald Ižip, thinks that oil will drop in price. “considering the impending recession, we expect a drop in prices of oil for next year by ten to twenty percent”, forecasts Ižip.

For one of the largest groups of customers, who use 3,000 cubic metres of gas a year for cooking, heating water and for heating houses, the gas price hike will increase their living expenses by almost 5.6%. In the higher category of consumption, which includes twin-houses for example, the prices from SPP will likely increase by six percent.

While gas customers face the threat that fees will increase also during the course of the year, customers of electricity traders will, in Holjenčík’s opinion, most likely enjoy rebates despite the announced New Year increase in electricity prices by two percent. This is because the regulatory authority is still investigating about ten questionable solar power plants, which have the right to support until proceedings are completed. When the cases are concluded, suppliers will have to return the unused fees to households.  “All households will then receive a rebate and it will only depend on agreement with the supplier whether they will receive the money immediately or use it to reduce their prepayments”, says Holjenčík.

In addition to having their right to support halted, the owners of questionable solar power plants could also face some wrangling before the courts. The court room will be visited also by representatives of the regulatory authority, however. There are currently already fifteen lawsuits filed with the Regional Court in Bratislava, which were lodged by the gas company when its proposals to increase gas prices in the past met with rejection. For the gas company, the increase in fees from January 2012 is also too little. “After in-depth analysis of the price decisions SPP will take further steps to protect its interests” the company spokesman Ondrej Šebesta points out. “The new prices of gas cover only part of the costs of SPP linked to the supply of gas in regulated segments. This means that also next year SPP will generate a loss of tens of millions of euro”, concluded Šebesta. In October already the gas company requested the regulatory authority to permit a price hike of 23 percent on average, but according to Holjenčík this was “high and unjustified”.

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