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Hungary: Energy price hikes impending

After the market liberalization in January, household consumers may expect a 10%–15% price hike of electricity, said Balázs Felsmann, expert secretary for the Economy Ministry (GKM).

In the case of an even higher increase, the government will support the most needy ones through a system similar to that of gas subsidization. Corporate consumers might face a much higher price hike, even as high as 40% – 50%, which endangers their competitiveness, writes daily Napi Gazdaság. The offers made by electricity dealers for 2008 are 30% – 50% more expensive, confirmed Mihály Szaniszló, president of the Corporate Energy Consumer Forum. There are ongoing negotiations with the ministry and the energy companies, he said. Both in Hungary and in the region there is a shortage of capacities, Márton Járosi, chairman of the association Energy Policy 2000 told the daily, that is why dealers will sell electricity at higher prices.

The prices should be frozen by the authorities, he said, since power plants and electricity providers have tremendous profits. The competition does not take place on the retail market of electricity but between producers or wholesalers, said Norbert Boross, spokesperson of electricity companies ÉMÁSZ Zrt and Elmű Zrt. Those outside the scope of public utility provisions will face a larger price hike because there will be no way for the current cross-financing, said Boross. The market will be dominated by the electricity dealers of the Southern European countries who will be ready to pay any high price because most of their production capacities disappeared during the Balkan wars. (Napi Gazdaság)