generic $700 energy bills and blankets for schoolchildren: The Czech Republic relied on Russian gas. Now everyday citizens are paying a terrible price
One year ago, Pavla Picková, a 50-year-old elementary school teacher living in the small town of Bílina, Czech Republic, wouldn’t think twice about vacuuming her two-story house.
But these days, she sometimes chooses to sweep instead, wary of a looming energy bill that is likely to be higher than anything she’s ever seen.
“Unfortunately, everything in our house is powered by electricity, so we’re saving as much as we can,” Picková told Fortune. She says her family is turning off lights, keeping all appliances unplugged, reducing their oven use, and heating the house only with wood to save money.
For now, they’re lucky enough to still have a fixed contract with an electricity provider, and 4,000 CZK (around $162) each month. But Czechs pay for energy by estimating annual payments based on the previous year. If they use more electricity, or if electricity has become more expensive, they have to pay the remaining balance at the end of their contract. Pickova worries that their real electricity balance, due in December, will be astronomical. And her electricity provider has already notified the family that starting in January, the bill will most likely be more than triple what it is now, rising to 15,000 CZK (around $600) monthly.
Picková is just one of countless Europeans who are dramatically changing their lifestyles, and bracing for shocking energy bills this autumn and winter after Putin’s invasion of Ukraine in February destabilized the global energy market, sending prices soaring.
The Czech Republic has been particularly hard hit because of its dependence on imported natural gas, 100% of which came from Russia before the Ukraine's invasion started. And although natural gas is only a small part of its energy portfolio, energy prices on other commodities have gone up as well.
Despite the Czech Republic being one of Europe’s biggest electricity exporters, when taxes are included, Czech households are currently experiencing the second-highest electricity prices in the EU, just behind Estonia, with no end in sight.
“No one can predict exactly how much our bill will go up,” Picková said.
Putin’s energy crisis
The bet on cheap Russian gas supplies backfired against Europe this year.
Just before Russia invaded Ukraine on Feb. 24, Germany halted the Nord Stream 2 pipeline project that would have doubled the amount of Russian gas shipped to Europe. After the invasion, Russia gradually slashed gas flows through Nord Stream 1, which has now been closed indefinitely. Europe previously relied on Russia for 40% of its natural gas, the price of which has soared and still remains more than 150% higher than it was at this time last year.
Higher energy prices have also helped fuel inflation on the continent and around the world. The Eurozone has been hit with 10% inflation, and the Czech Republic suffered from 18% inflation in September. As a result, the country has experienced its most significant year-to-date drop on the Financial Situation Index (FSI), comparing the economic health of Czech Republic with other EU countries, since 1993.
Even though the financial situation of Czech households is around the EU average, their savings are among the most jeopardized by the increasing energy prices, and energy bills account for 6.1% of their spending—roughly a third more than the EU average, according to FSI.
“Concerns [among Czechs] are similar to those of the years when the world was dealing with the 2008 financial crisis,” said Martin Buchtík, director of the sociological research agency STEM, said in June in a press release from KPMG, an accounting organization. He added that “45% of people are concerned about the future, 45% are insecure about the future.”
The Czech government has been slow in coming up with measures to help average citizens suffering under high energy bills, Jan Švejnar, a U.S.-based Czech-born economist, director of the Center on Global Economic Governance at Columbia University, told Fortune.
Recently, ministers introduced a price cap for energy bills ($0.24 per kilowatt hour of electricity and $0.12 for gas) as a part of the relief package, which would guarantee a certain price level so that everyone would know the maximum amount they would be paying throughout 2023.
But Švejnar warns that the price cap should be also set in a way that motivates Czechs to reduce their energy consumption even more than they are doing now. The Czech economy is demanding in terms of energy consumption, so he worries that the current energy savings won’t be enough for the whole winter.
So far, the Czech government has secured 3 billion cubic meters of alternate annual gas capacity through a liquified natural gas terminal in the Netherlands. However, that covers only one-third of what it used to import from Russia. That’s why it’s important for the country to stock up now—reserves are at nearly 90% capacity, Czech Industry Minister Josef Síkela said at a press conference in early October.
But that will only last for “a couple of months, half of the winter maybe, depending on how harsh the weather will be and a bunch of other circumstances,” said Švejnar. He added that a new complication is OPEC+’s recent cut of oil production which could drive gas and electricity prices even higher.
“In Europe, we’re not talking about a few percentages increase [of energy bills] as we are seeing in the U.S., we’re talking about multiples. That’s mind-blowing,” he said.
Frustration on a rise
In February, right after the war began, the gas bill for Jiří Richter, 26-year-old insurance advisor from a small town in Cheb region, West Bohemia, went from 5,600 CZK to 19,500 CZK (around $220 to $780). His electricity bill went from 3,200 CZK to 9,000 CZK (around $125 to $360).
“That was hard for me to manage, as I am taking care of my 3-year-old disabled son by myself,” he told Fortune.
Richter managed to opt out of the last three years of the contract with his former energy provider and found a new one. Now, he pays “only” 12,700 CZK a month (around $505) for gas, double what he had normally paid, and 5,000 CZK (around $200) for electricity, one and a half of what he had paid pre-energy crisis.
Like Picková, Richter tries to reduce his energy consumption by unplugging electric appliances and turning on lights only when necessary. He’s also considering insulating the house he lives in with his father, and building a fireplace in the living room. But he says there’s only so much he can do, and would welcome more help from the government.
“The help for Ukraine bothers me even more now as I need help too, but I’m not entitled to social benefits, and if I am, it’s not automatic, and there’s much bureaucracy behind it,” said Jiří Richter.
The Czech Republic was one of the most vocal supporters of Ukraine, and Prime Minister Petr Fiala was one of the first leaders to visit Ukrainian President Volodymyr Zelenskyy in Kyiv in March 2022. But as the energy crisis drags on, many Czechs are growing frustrated that the country is not helping its own people with the cost-of-living crisis too.
The public discontent has caused tens of thousands of people to fill Prague’s Wenceslas Square in multiple protests this year, bringing together political forces from the far right to the far left that have never cooperated before.
So what will happen to average Czechs this winter?
Major politicians are telling people to put on a sweater. And at one high school in the town of Kolin, principal Klára Brezmenová ordered one blanket for every student, so they could better adjust to lower temperatures as the school turned down the heat.
One student, Simona Vrabčáková, told Fortune that she usually sits at her desk with the blanket wrapped around her legs, wearing a jacket.
“It’s great. We’re at least a bit warmer,” she said.
This story was originally featured on Fortune.com
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