In its current form, the fixed, very low prices of household gas and district heating have resulted in a waste of taxpayers’ money and are socially unjust, according to a study commissioned by the Clean Air Action Group. Zombor Berezvai, associate professor at the Corvinus University of Budapest, presents detailed calculations on how the fixed natural gas and district heating prices could be eliminated in a politically acceptable and socially just way. The NGO submitted the study to István Kapitány, Minister of Economy and Energy.

The artificially low prices of residential natural gas and district heating cause substantial overconsumption and waste, and thus a significant environmental burden. Maintaining them costs the state budget almost HUF 900 billion per year, deteriorates the country’s balance of payments, and carries a significant energy security risk.

In addition, they also cause a reduction on the return on investments in energy efficiency and renewable energies. It undeservedly puts companies engaged in such activities at a market disadvantage, and our building stock is thus renewed much more slowly than it would be possible otherwise.

The system is also socially unfair: up to the average consumption, even those who do not need it receive public support

Monetary compensation for the population

It would be best to ensure affordable residential energy prices by improving the energy efficiency of buildings, as this would significantly reduce the need for heating. The renovation of the housing stock is extremely important, but it will take decades to achieve, so affordability can only be achieved in one way if the fixed household energy prices are abolished: by monetary compensation of the population.

Therefore, the Clean Air Action Group recommends that the state redistribute to the population the money saved by abolishing the fixed price.

“Our study analyses several options for abolishing the fixed household energy prices and compensating the population, demonstrating that this can be achieved with social acceptance. It is the task of the government to decide on the concrete implementation based on further analyses,” said Zombor Berezvai, author of the study.

“The fixed household energy prices were a big lie of the previous government, as we all paid the price through our taxes and countless other disadvantages. We hope that the current government will choose the path of truthfulness in this area as well,” added András Lukács, president of the Clean Air Action Group.

The study describes in detail the compensation systems operating on a per capita and per-apartment basis, which also effectively respond to vulnerable life situations (e.g. heating of large properties left over from elderly single people or children who have moved).

The study can be downloaded here (in Hungarian).