The suspension of a wholesale electricity price clause included in power bills will not bring about instant price relief for consumers as suppliers are continuing to take on new costs that threaten to eliminate any prospective price reductions ahead of increased state subsidy support.
New regulations will require electricity suppliers to inform households and businesses on prices they will charge two months in advance. On July 10, when this pricing rule will be activated, suppliers will need to announce their price per KWh to be charged two months later, on September 10. On August 10, suppliers will need to do the same for their price on October 10, and so on.
Power utility PPC, the retail market’s dominant player, will play an influential role in market price levels. If the utility subdues prices levels, rival players will follow suit in an effort to their maintain market shares or possibly increase them.
Electricity consumers charged fixed tariffs – they represent a small percentage of the market – will, from now on, need to pay a penalty fee should they leave their supplier prior to the expiration of agreement.
Uncertainty will remain prevalent despite the new rules. At this stage, there is no model offering electricity price forecasts two month down the road, which is a problem given the market volatility. A single announcement by Russian president Vladimir Putin, or a European Commission package of sanctions against Russia, is enough to send natural gas prices flying and, as a result, lead to sharp wholesale electricity price increases.