Croatian companies face up to 400 percent higher power bills with new contracts

The Croatian Employers’ Association (HUP) has asked the government to subsidize businesses for electricity consumption, as power prices in new supply contracts jumped almost 400 percent.

The Croatian Employers’ Association is asking for electricity subsidies similar to the model introduced for natural gas, Poslovni dnevnik reported.

Croatia presented a package of measures worth EUR 637 million in February to limit the expected increase in electricity and gas prices to 9.6 percent and 20 percent, respectively. Households have received aid for electricity and gas, and the firms only for gas.

Now HUP says that subsidies for electricity are needed, especially for companies where the cost of electricity exceeds sales and production growth.

The night tariff increased as much as 6.5 times

In order to mitigate the impact on businesses, at least the share of the cost of electricity that exceeds the current ratio of the expenses of production and sale of products and services should be subsidized, said HUP.

For example, one of the companies received a proposal for a new contract from power utility Hrvatska Elektroprivreda (HEP) after its three-year contract expired. The old daily tariff was EUR 0.072 per kilowatt-hour, and the new one is EUR 0.34 – an increase of almost 400 percent. The previous night rate was EUR 0.037, and the new one is EUR 0.28 – an increase of 6.5 times.

Of note, companies have been receiving new contracts with higher prices since October; however, the price increase in double digits appeared only recently. Three-digit growth has threatened companies in BiH and Serbia, but the two countries capped prices or limited the increase. Other countries in the region, such as Bulgaria, Croatia, Greece, and Romania, introduced subsidies.

Fees, excises, taxes that in the price of electricity need to be abolished

HUP is also asking for the temporary abolition of fees for the distribution and transmission networks, excises, and other taxes that form the final price for the consumer.

It is also essential to encourage investments in energy efficiency through the rapid implementation of public calls for incentives from the recovery and resilience plan to help resource and energy-intensive industries.

HUP noted that European countries are introducing schemes to incentivize investments in energy efficiency and renewable energy without previously announced public calls but in line with clearly defined rules. Under such models, companies are exempt from paying income tax and entitled to retroactive subsidies, said HUP.