Hungary’s government has declared a state of energy emergency and has approved seven measures that will include limiting the price caps on gas and electricity to average consumption levels from August 1, the prime minister’s chief of staff said on Wednesday.
The protracted war in Ukraine and the sanctions imposed by Brussels on Russia have led to a dramatic increase in energy prices throughout Europe, causing an energy crisis in a large part of the continent, Gergely Gulyás told a regular press briefing.
It has also become clear in the recent months that as things stand, Europe will most likely not have enough gas for the autumn and winter heating season, he said.
Therefore, in the interest of protecting Hungarian families and the economy’s energy supply, the government has followed the example of several other European countries and has declared a state of energy emergency, Gulyas said. It has also approved a plan of seven measures that will enter into effect in August, he added.
Gulyás said the measures would ensure that the country has enough energy in the winter and that the scheme to cap utility bills can be upheld.
Detailing the government’s seven-point plan, he said domestic gas production will be increased from an annual 1.5 billion to 2 billion cubic metres. Citing a ministry report, he said the extraction of gas fields could be increased further. Gas prices are high enough that it is even worth using more expensive technologies in gas extraction, he added.
The government has also mandated the minister of foreign affairs and trade to procure more gas, Gulyás said. Hungary’s natural gas storage facilities are currently 44 percent full, which is enough for three months, he said, adding that the aim was to have as much gas available as possible. As part of the measures, the government is also introducing an export ban for energy, including firewood, Gulyás said.
Also, lignite extraction will be stepped up and the blocks at the coal-fired Matra power plant will be restarted, he said. The government will also initiate extending the lifespan of the Paks nuclear power plant, he added.
Meanwhile, he said a blanket cap on electricity and gas prices was “simply unaffordable in the current wartime energy crisis”. The utility price cap scheme will therefore be limited to average consumption levels from August 1. Those who consume more energy than the average will have to pay the market price, he explained.
Average monthly electricity consumption in Hungary is 210 kWh, while an average household consumes 144 cubic meters of gas a month, Gulyás said. Three quarters of households will not be affected by the change because their consumption is below the average level, he said, adding that market prices will only apply to consumption over the average for the remaining one quarter of households as well.
Szilárd Németh, the government commissioner in charge of the utility price cap scheme, said large families will continue pay the reduced gas prices, but a consumption limit for the caps will remain in place. Going forward the consumption threshold for the reduced gas price for a family with three children will rise to 2,329 cubic metres a year from 1,729 cubic metres, he said. The threshold increases by 300 cubic metres for every additional child, he added.
The government’s new measure and the utility protection fund aim to ensure that the utility price cap scheme can remain in place, Németh said. He said that under the scheme, an average consumer’s monthly electricity bill comes to 7,750 (EUR 19) forints, which would be 50,833 forints without the utility price cap. Meanwhile, the average monthly gas bill totals 15,833 forints rather than 131,441 forints thanks to the scheme, he said.
The scheme saves consumers 158,691 forints a month, Németh said.