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Electricity and gas prices will not rise from July 1

The price of electricity and natural gas will not change from July 1, the National Development Ministry announced Thursday.

The current mandatory energy purchase scheme ends on July 1, 2011 and will be replaced by one that focuses on offering incentives for heat energy generated using renewable fuel. From July, gas-fueled power plants will no longer be subsidized under the scheme. The state will guarantee the purchase of electricity from plants built by investors who have still not recouped their investments, but at market prices, Gazdasagi Radio said in April. Purchases of heat generated by combined-cycle power plants for residential district heating will still be subsidized by the state, it added.

The terms of phasing out gas-fuelled combined-cycle power plants from the mandatory energy purchase scheme were being worked out in March, taking into account the view of industry professionals. In restructuring the regulatory system, the government will focus on ensuring that district heating service is provided to households at accessible prices, the ministry said.

The restructured system would save the state HUF 20 billion-30 billion.

The government is also working on a new system for purchasing energy generated from renewable fuels under which a quota would be set for purchases. If the quota is exceeded in any given year, no more parties would be allowed to join the system.

The new heat generation subsidy system is expected to take effect on October 15, 2011, after approval by the European Commission.