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EconomyEuropean countries protect their citizens from high electricity prices

European countries protect their citizens from high electricity prices

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Electricity prices have risen across Europe over the past year. According to analysts, the lifting of restrictions due to COVID-19 has led to huge demand for natural gas amid limited supplies. Blue fuel is important for the production of electricity on the continent and this leads to higher electricity prices. Natural gas prices have reached record highs in recent months under the influence of a number of factors.

The absolute price maximum of the international hub TTF in the Netherlands was marked on December 21, 2021 – 179,887 euros per megawatt hour. In addition, carbon prices have reached record levels of 82.40 euros per tonne as of 14 January, after hovering around 80 euros per tonne recently. This also pushes up the price of electricity produced by coal-fired power plants.

it costs the treasury about 2 billion kroner ($ 567 million).

Belgium wants a reduction in VAT on electricity and gas

The Belgian government is proposing to reduce VAT on electricity and gas from 21 to 6 percent, local media reported yesterday. This proposal is expected to be considered by the Federal Parliament soon. It is estimated that such a measure would cost the budget 770 million euros a year. Since last autumn, measures have been taken in the country to protect the most vulnerable citizens from high energy prices. About one million households received assistance, paying at reduced prices and receiving 80 euros a month in compensation to cover their bills. Belgium applies different VAT to individual goods and services, with 21 percent being the highest tax rate. So far, energy is taxed at the highest rate, but authorities are ready to limit excise duties to further support households.

The situation in Bulgaria

In Bulgaria, the price of electricity for household consumers is regulated by the Energy and Water Regulatory Commission (EWRC). It is usually changed once a year and is valid for the regulatory period from 1 July to 30 June. However, the energy law allows the regulator to change prices every three months.

Therefore, the energy regulator predicted that the price of electricity for households will increase by an average of 11.5% from January 1 this year. In the case of heating and hot water, the planned increase on average for the country would be 13 percent, according to reports published by the EWRC. However, these increases did not become a fact because the National Assembly imposed a moratorium on the price of electricity, water and sewerage services and heat.

In the UK, prices are fixed

In the UK, households are protected because electricity prices are fixed. The energy regulator calculates the price ceiling according to a special formula, which includes components such as the value of natural gas, the cost of the energy network, as well as subsidies provided by the British government for renewable energy sources. The level of the restriction is updated twice a year.

In Spain, electricity tariffs are not fixed, but are flexible. In most European countries, household consumers buy electricity from the free market, in Bulgaria so far only non-household consumers buy electricity from the Bulgarian Independent Energy Exchange (IBEX).

Energy market prices in Europe

Europe’s energy exchanges are increasingly integrated into the European single electricity market. This somewhat equalizes the prices of electricity on the stock exchanges, especially in neighboring regions.

The average monthly price for the base load of electricity of the IBEX in December was about 220 euros per megawatt-hour – a value comparable to that of the regional exchanges – OPCOM (Romania), HenEx (Greece) and HUPX (Hungary), the exchange said. Record electricity and natural gas prices in Europe have forced individual governments to take various measures to compensate.

In Bulgaria, in the protection of consumers from high energy prices at the end of last year, compensations totaling BGN 1.5 billion were planned, which will be valid until the end of March 2022. Compensations for business for December are estimated at 75 percent of the difference between the base price of BGN 185.59 per megawatt-hour and the real average monthly stock exchange price of the IBEX “day ahead” segment for the respective month, but not more than 30 percent of the real stock exchange price for July 2021.

In Poland, the law will protect public institutions

The Polish government is planning a new law to limit the impact of rising natural gas prices on public institutions such as hospitals, Deputy Prime Minister Jacek Sashin was quoted as saying by Reuters on January 11. This is part of a package of measures to combat inflation. The new law also provides for a tariff mechanism to be applied to households.

“This mechanism means that the increase in gas bills for households remains very large. However, an increase of 54 percent on average for these customers is quite reasonable compared to several hundred percent, up to 800, for other legal entities,” he said. јерът. Poland has already announced that it is reducing taxes on electricity, petrol and basic foodstuffs, as well as granting financial aid to households.

The second package of measures in the Central European country, specifically aimed at mitigating the effects of high prices, includes lower VAT on gas, oil and food in a bid to curb galloping inflation. It was also announced on Tuesday by Prime Minister Mateusz Morawiecki. The program aims to leave as much money in the pockets of Poles as possible, Moravetsky was quoted as saying by Reuters. The measures envisage a zero VAT rate on gas and basic foodstuffs, as well as a significant reduction in VAT on fuels, heating and electricity. According to the prime minister, the measures will cost the budget 15-20 billion zlotys (3.74-4.99 billion dollars).

As of yesterday, the Polish state-owned company PGNiG has reduced by 25 percent, effective until the end of February, the price of gas for small business customers such as bakeries, hairdressers and others.

266% jump in electricity costs in Sweden

On January 12, Swedish Finance Minister Mikael Damberg announced that the government would grant compensation to households hardest hit by rising electricity prices. The cabinet has set aside 6 billion kroner ($ 664 million) for this purpose. Households consuming more than 2,000 kilowatt-hours of electricity per month will be able to receive compensation of about 2,000 kroner ($ 220) per month for the period December-February. The measure could cover about 1.8 million households, the government said.

In Sweden, too, electricity has risen in recent months, especially in the south, albeit at a slower pace than in other parts of Europe. The country produces electricity from hydroelectric power plants, nuclear reactors and wind farms and does not rely on natural gas imports. However, prices are formed on international markets, which also affects local consumers. According to the Swedish energy market regulator, electricity costs for an average apartment in the southern half of the country, where the majority of the population lives, jumped 266 percent year-on-year in December. The cost of an average house heated by electricity has increased even more – by 361 percent over the same period.

Swedish Finance Minister Mikael Damberg and Swedish Energy and Digitalization Minister Hashajar Farmanbar explain at a press conference what measures will be taken due to the high price of electricity

Meanwhile, Norwegian authorities have said they do not support the opposition’s proposal for a cap on electricity prices for household consumers. The cabinet there introduced a scheme to subsidize part of the household accounts. Last month, a plan was announced to help consumers up to 5,000 kilowatt hours per month, which will

In France, they limit the growth of prices

France intends to limit the increase in the price of electricity to 4 percent this year in an attempt to keep it affordable for consumers, Economy Minister Bruno Le Mer was quoted as saying on January 13. The state has significantly reduced an important tax on electricity, leading to a loss of 8m euros in revenue for the treasury, Le Mer told Parisien. In addition, the government has ordered state-owned EDF to sell more of its cheap nuclear power to smaller competitors in another move to curb rising prices. The plan has been approved by the European Commission. In a statement, the electricity supplier said the move would cost it up to 8.4 billion euros.

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