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The situation on the energy markets in Europe has changed fundamentally since last year, including in the Czech Republic. Energy prices have risen dramatically since the end of last year and everyone will pay extra for them. Some energy traders have already got into trouble by the aggravated situation on the market, which has led to the cessation of their activities.
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Due to the current situation on the energy market, many unknowns are emerging both from the point of view of suppliers and from the point of view of customers. How do suppliers buy energy today, what products do they offer and how can the customer save on energy consumption?
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To understand purchasing principles, it is important to realize that energy consumption fluctuates throughout the year. In the winter months, when it is colder and darker earlier, energy consumption is logically higher. As the number of solar days, ie light and heat, increases, the energy consumption naturally decreases – the annual consumption curve thus has an approximate shape to the width of the stretched letter U.
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The supply of energy is usually perceived as a constant stream of electricity or gas, which is used for lighting, heating and ensures the operation of various appliances. In principle, this is the case, and the electricity in the distribution network and the gas in the pipeline are a really physically homogeneous substance. However, in terms of production and resale, these commodities form several parts.
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Who is who
An energy supplier, or trader, who buys electricity or natural gas on a stock exchange and then sells it to consumers. Each customer chooses the supplier himself, and can thus influence the final price at which he will be charged for the consumption of gas or electricity. Each supplier determines the amount of the commercial part of the price, which is not regulated in any way. Therefore, there are also more offers on the market at different prices.
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The energy distributor, or distribution system operator, ensures the physical transport of electricity or gas. It does not sell electricity or gas. The business is provided by the supplier. As this is a so-called natural monopoly for the distributor, the prices for his services are regulated by the state through the Energy Regulatory Office.
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“A balanced supply, where the power plant produces the same amount of megawatt-hours (MWh) every hour of every day of the year, is expressed in a straight line and the electricity thus produced is called CAL. Analogously to natural gas, CAL represents a constant annual volume of extraction again in MWh and is also more or less described by a straight line. However, quarterly production or mining takes into account seasonal effects and is characterized by a curve. The situation is similar with monthly and daily production and extraction, “explains Jiří Matoušek, a member of the Board of Directors of the independent energy supplier Centropol.
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And it is the way in which they buy gas or electricity that determines the conditions under which suppliers can then smoothly cover the consumption of their customers. “They purchase energy on wholesale markets (energy exchanges) through annual (CAL), quarterly, monthly, weekly and also daily (spot) energy products, which differ in price,” adds Matoušek.
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Products offered to customers
The only product offered to end customers, which is directly linked to the current price on the daily market, is only the above-mentioned spot. Furthermore, there are products on the market with a fixed price for one, two or three years, when the set price is guaranteed for a given period, and then we have products for an indefinite period with a fixed and non-fixed price as well as fixed-term products with a non-fixed price.
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At present, however, according to Jiří Gavor, executive director of the Association of Independent Energy Suppliers, wholesale prices are either at or near historical highs, and their further growth could be caused only by a complete halt in the flow of Russian gas. According to him, the attitude of customers to how long to fix the price for energy supplies should also change.
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“If the war situation in Ukraine starts to improve, it will undoubtedly have a positive effect on the wholesale market as well, and there would be a significant drop in energy prices, which would be reflected in the final prices for the customer with a delay. A customer who fixes today for a longer period, for example for three years, practically gives up this possibility of a positive reversal, so I would rather not recommend long-term fixations, “says Jiří Gavor.
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Matoušek from Centropol does not recommend long-term fixation either. “To recommend whether it is advantageous for the customer to enter into a fixed price contract for a period longer than one year, it is crucial whether the length of the commitment is sufficiently offset by a lower price, which is not happening on the market now. The current wholesale prices of electricity and natural gas are extremely high, which is why we now recommend concluding fixed-price products for a shorter period of one year, for electricity for a maximum of two years, ”says a member of the Board of Directors.
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Paradoxically, according to the executive director of the association of independent suppliers, such a good price can be the product that most reflects price changes, ie for which spot prices are charged. “However, it is a product that is difficult to predict. There are a lot of household customers who prefer to be sure, even at the cost of a higher price, ”adds Gavor.
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Series SZ Business: How to fight precious energies
- Focus on suppliers
- Energy eaters and how to fight them
- Households and companies as energy suppliers
- How to keep the house warm
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When to consider changing supplier
Given the market variants of products for the customer, the question arises in which case and whether in the current situation to consider switching to another supplier.
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According to experts, changing the supplier is a much riskier affair in today’s situation than ever before. Even before it escalated, suppliers tended to compete with the competition, and it was no exception that customers received special prices for switching to another supplier. Today the situation is rather the opposite.
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“First we need to get an overview of the current offers, what alternatives we have available. Not all suppliers are now recruiting new customers, this needs to be taken into account. If I want to leave the supplier, I should have a new one selected and verified that the offer is really valid before I terminate the current contract, “advises Michal Kebort, spokesman for the Energy Regulatory Office.
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According to him, the driving force for change should not be primarily price. “The price is now rising across all suppliers, if our supplier increases the price by 10 percent, for example, and we decide to move to another, which has not increased the price for a long time, it can very easily happen that the price lists will change shortly after the transition . In addition, it is still true that suppliers tend to keep lower prices with long-term customers longer, while new ones pay extra, ”says Kebort.
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According to Matoušek from Centropol, however, customers who have a spot product and have not chosen it themselves should consider changing the supplier.
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This happened, for example, shortly before the closure of Bohemia Energy’s customers. The spot product, by its nature, responds to all changes in the market. Today, the price of electricity continues to rise due to reduced gas supplies to Europe, and customers will immediately feel the price increase with this product.
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“We expect that smaller suppliers may not be able to cope with the situation with high electricity and gas prices and will close down. At present, existing customers of stable suppliers, who buy electricity and natural gas in advance for a long time, usually have lower prices on their existing products than new customers. So now it doesn’t pay much for them to change suppliers, “advises the expert.
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DPI clients pay extra for energy
Those customers whose suppliers have not been able to meet their obligations in recent months have switched from so-called suppliers of last resort (DPI) by law. This affected hundreds of thousands of energy suppliers’ clients this year. By changing suppliers, they were sure that they would receive energy, but they purchased it at significantly higher prices.
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Supplier of last resort (DPI)
DPIs are designated by the Energy Regulatory Office to provide their services to customers whose permanent suppliers are suddenly unable to meet their obligations. They are always the strongest entities in the area, the territory of the republic is territorially divided and in the whole state there are only three for electricity supplies and three for gas supplies.
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ČEZ The sale provides electricity for the Karlovy Vary, Plzeň, Central Bohemia, Ústí nad Labem, Liberec, Hradec Králové, Pardubice, Olomouc and Moravian-Silesian regions,
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EG.D for the Vysočina, South Bohemian, South Moravian and Zlín regions,
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Prague energy for Prague and surroundings.
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innogy Energie supplies natural gas in the Karlovy Vary, Plzeň, Central Bohemia, Ústí nad Labem, Liberec, Hradec Králové, Pardubice, Olomouc, Moravian-Silesian, South Moravian, Zlín regions and in the Vysočina region,
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EG.D in the South Bohemian Region,
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Pražská plynárenská in Prague and surroundings.
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For customers who find themselves in DPI mode, these suppliers logically cannot have the energy purchased in advance as for their existing customers, and must therefore purchase for them at current prices. DPI prices are therefore usually higher for final customers than for regular customers of the supplier.
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It is the amendment to the Energy Act, which was quickly approved by the Senate on 15 June and is now intended to be signed by the President, which, among other things, also regulates the DPI regime.
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“It shortens the current six-month period to three months and also introduces a new rule. If the customer does not find a new supplier in the DPI mode within the newly set period of three months, after this time DPI automatically becomes its new standard energy supplier according to the standard price lists of the given supplier, “says Matoušek for SZ Byznys.
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According to Gavor, this is a positive change in energy legislation. “At the same time, however, I think that even in unfavorable situations, it pays to look at the comparators of energy suppliers’ offers and find out whether there is a better price offer on the market,” he adds.
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How to save energy
Despite the problematic situation on the energy market and the great rise in prices, there are ways that can save households thousands of crowns a year in energy. These include the optimal distribution rate and circuit breaker size.
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The distribution rate is assigned to the customer by the distributor according to the nature of the consumption point, the composition of appliances in a specific consumption point, their type and number.
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If there are only ordinary appliances in the given consumption point (lighting and cooking), which is the case for the vast majority of households, its rate will be one-tariff – D01d or D02d (for business entities the code is C01d, C02d). This means that the price for electricity is the same throughout the day.
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If there are devices at the consumption point intended for water heating, heating, or for recharging an electric car, a two-tariff rate is assigned to the consumption point. In such a case, the so-called high tariff (VT) and low tariff (NT) come into force and for a certain number of hours from each day a lower rate is charged for electricity.
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Examples of appliances with higher power consumption using a cheaper low tariff and NT times in 24 hours:
- boiler D25d – 8/24
- storage heaters D26d – 8/24
- electric car D27d – 8/24
- hybrid thermal device D35d – 16/24
- direct heater D57d – 20/24
- heat pump D57d – 20/24
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To switch to a two-tariff distribution rate, it is necessary to document the distributor’s installation of a specific device with a corresponding share of the total household input with an audit report and then obtain technology from it for automatic switching between high and low tariff – mass remote control (HDO).
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“With the two-tariff distribution rate, the customer pays higher fees for the circuit breaker, but the price for 1 MWh distributed in the low tariff is low. It pays to use the start-up of more demanding appliances, such as washing machines, dishwashers, dryers, for the time when NT is activated, “explains Matoušek from Centropol.
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“As for the main circuit breaker, its capacity also affects the amount of distribution fees. The capacity must be determined by an expert according to the composition and power consumption of individual appliances at the point of consumption. But by optimally setting the combination of the right distribution rate and a suitable circuit breaker, you can save on distribution fees, ”he adds.
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In addition to the well-chosen tariff and distribution rate, however, according to Jiří Gavor, we cannot forget the so-called “grandmother’s advice”, which can help consumers save significantly on energy.
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“Every customer has simple operational measures in their power. Just check the freezer, which is running constantly, for frost. Also, take care, for example, that we do not boil unnecessary water in the kettle or get used to cooking in a pot with a lid. These are small savings, but they are repeated very often in everyday life. At a time when energy was cheap, no one paid attention to it, but today it is advisable to think about it, “concludes the expert.
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