Croatia, Electricity price increase almost certain

, SEE Energy News

Last year’s high inflation rate of 10.8 percent means an additional increase in the prices of certain services this year by approximately the same amount, so, for example, telecom companies have already incorporated into their general condition the possibility to raise their prices by ten percent.

This has not yet spilled over to individual contracts with users only because the Government has discussed with the telecoms and is still discussing the postponement of the price increase that will inevitably happen this year.

However, telecoms are not the only ones that have the possibility to adjust the prices of their services for the inflation rate, some companies have incorporated such provisions into contracts with their customers, and after the annual inflation rate is published, their implementation begins, writes Novi list.

Thus, HEP Opskrba will increase the prices of part of its customers from the entrepreneurship category from March 1, HEP confirmed.

– HEP Opskrba, these days, sent a notice to a small number of its customers from the entrepreneurship category about the change in the price of electricity due to the increase in the annual consumer price index. We are talking about customers who have active contracts with a fixed price, concluded in the period before the outbreak of the current energy crisis and the enormous increase in wholesale, market prices of electricity.

It is important to note that all these customers have a contracted price that is significantly lower than the price limited by the Government Regulation on eliminating disturbances on the domestic energy market, HEP reveals. They add that even after the price change from March 1, those prices will still be lower than the one set by the Government’s decree, which the Government passed in order to protect businesses and households from a strong increase in electricity prices.

They note that customers who have received a price change notification have the right within eight days to notify HEP Supply of non-acceptance of new prices and intention to terminate the contract, and in this case, customers may terminate the contract without paying a fee for early termination of the contract. It is unlikely that they will do so, given that their prices will still remain below the limited, or protected, price set by the Government as part of measures to fight inflation.

However, HEP warns how much of a financial burden has fallen on that company when prices are limited and that measures must be taken to improve their financial situation, and whether this will also mean an increase in the price of electricity for households and businesses from April 1 is not yet known. but such a scenario will once again be difficult to avoid, especially if the Government does not come up with compensation for that company.

HEP reveals that “the financial burden borne by the HEP Group in the implementation of the measures amounts to around 900 million euros”. This company, which is owned by the state, has borne the brunt of the Government’s measures that limit the prices of gas, electricity and heat energy for households and businesses, but they warn that it is necessary to take measures in order to improve their financial situation.

The government’s measures, i.e. the decree limiting prices, are valid until March 31, and the government has already announced that they are working on a new package of measures without revealing the details. In the meantime, gas prices on the markets have returned to values before the Russian aggression against Ukraine and before the energy crisis, but electricity prices are still high, and HEP can obviously no longer bear the burden of selling at prices that are lower than those at which it was buying energy on the market.

With its message that it will undertake activities to improve HEP’s financial indicators within the framework of the decree and applicable regulations, that company says that from March 1, it should be allowed either to raise prices for households and businesses, or to find some other way for the state to compensates the losses that HEP has by applying those lower prices. The government could possibly keep the current price of electricity, and lower the VAT rate from 13 percent to five percent, so the difference would be a kind of compensation to HEP, but the question is how much of a deficit it would create in the state budget, which still allocates high amounts for other market interventions.

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