Energy Crisis

Croatia caps power prices for households, businesses

Croatia limits electricity prices for households, companies andrej plenkovic

Andrej Plenković (photo: Government of Croatia)

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September 8, 2022

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Published:

September 8, 2022

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The Government of Croatia adopted another package of measures to ease the burden of high energy prices on households and businesses. The main steps include limiting the price of electricity for citizens and firms, and introducing a special tax on companies’ windfall profits.

The autumn package of measures of the Croatian government, which also includes subsidies for the poorest, is worth almost EUR 2.8 billion. It is the second one since the energy crisis began.

The first set of measures, rolled out in February, was estimated at EUR 637 million and did not include a limit on electricity prices. The measure has already been introduced elsewhere in the Balkans including in Serbia and the Republic of Srpska. However, the price cap in Croatia is different as it involves consumption levels, which is supposed to stimulate savings.

HEP will receive the most money from the government’s package

During today’s presentation of the package at a government meeting, Prime Minister Andrej Plenković said it intends to protect citizens and the economy, but that it does not forget the long-term goal to accelerate the transition to renewable energy sources. Power utility Hrvatska Elektroprivreda (HEP) will receive the largest part of the package – EUR 785 million, to make up for the shortfall from the cap on the company’s heating and electricity prices.

Croatia limits electricity prices for households, companies

According to the decision, from October 1 to March 31 the price of electricity for households for consumption of up to 2,500 kWh, which is 417 kWh per month, will be EUR 59 euros per MWh. If they consume more, they will be charged EUR 88 per MWh.

The price for businesses ranges from EUR 59 per MWh to EUR 230 per MWh

The Croatian government decided to put kindergartens, schools, non-governmental organizations, hospitals, municipalities, cities and utility companies in a different category than other legal entities, setting the price of electricity at EUR 62 per MWh.

For total consumption of up to 250 MWh over the six months, the price for businesses will be EUR 70 per MWh. For a level between 250 MWh and 2.5 GWh, they will be charged EUR 180 per MWh.

Companies that consume over 2.5 GWh from October through March will pay EUR 230 per MWh. The current price of electricity on the wholesale markets is above EUR 630 per MWh, the government said.

The price of heating will remain the same in the winter

The Croatian government also decided not to change the prices of 98% of the delivered heat for the 2022/2023 season, which refers to 159,000 consumers.

The discount for firewood will be increased from 5% to 10% per cubic meter, while forest management utility Hrvatske šume will increase production from one million to 1.1 million cubic meters. In Croatia 35,000 citizens use firewood.

Windfall tax is introduced

Plenković pointed out the government would propose a special profit tax to the Parliament so that the burden of the crisis is distributed fairly.

The intention is to tax the companies with profits that have grown during the crisis, Plenković said and added everyone has to contribute.

Next week, the government will also cap margins and regulate the price of bottled liquified petroleum gas (LPG).

It previously announced that as part of the package, it would abolish VAT on solar panels.

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