Sokolovská Uhelná, a prominent heat production company in the Czech Republic, has revealed plans to implement a substantial price increase for heat produced at Vřesová and the Tisová power plant, starting in 2024. The announced increase ranges from 20 to 25 percent and is primarily attributed to the rising costs of emission permits, which currently constitute over 50 percent of heat production expenses.

In a press release, the company clarified that, despite the forthcoming price adjustment, the cost of coal-generated heat will remain competitive, maintaining a lower price point compared to heat produced from alternative sources such as natural gas. Sokolovská Uhelná, which owns the Tisová power plant, has maintained relatively stable heat prices over the past two years. However, factors such as increasing emission permit costs, anticipated rises in mineral mining fees, and other expenses related to state-imposed obligations on heat production necessitate this adjustment for the upcoming year.

Throughout 2022 and 2023, the company absorbed a significant portion of production and supply costs to prevent passing on the full extent of cost increases to consumers. However, the current economic landscape has rendered this practice unsustainable. The principal driver of the price revision is the soaring cost of emission permits, constituting more than half of the heat production price before reaching end consumers through distribution channels.

While coal mining processes, including associated labor costs, now represent a smaller fraction of the overall price, other factors contributing to the increase include maintenance expenses, investments in coal sources, dispatching, and a heightened fee for mined minerals paid to the state. The ultimate cost of heat for end-users, typically households, is determined by city or municipal heating plants and companies in the heating industry.

For instance, Sokolovská Bytová, a city company, currently supplies households with heat for 803 koruna per gigajoule, including VAT. This represents a 15 percent increase compared to 2022. If local distributors fully incorporate Sokolovská Uhelná’s price hike into the final cost for customers, households in Sokolov could witness the price of heat approach or exceed 1000 koruna per GJ in the next year. This translates to an increase from 25,000 to 35,000 koruna for heat and hot water.

In conclusion, Sokolovská Uhelná and its subsidiary, Elektrárna Tisová, are actively engaging with all distributors to communicate the rationale behind the upcoming price increase, substantiated with comprehensive data. The final customer price will not only reflect the rise in production and supply costs but also include expenses related to operating the heat distribution system, directly influenced by distributors. Despite the impending increase, coal-generated heat remains competitively priced, maintaining a one-third cost advantage over gas-generated heat.

Article by Prague Forum