Hungarian Families Pay the Lowest Gas and Electricity Bills in Europe

By: hungarytoday.hu

Jan 08 2025
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Hungarian Families Pay the Low

With the end of Ukrainian gas supplies from Russia to Europe in January, gas supply has fallen again and the overall uncertain situation is leading to higher gas prices. Meanwhile, the Hungarian Energy and Public Utilities Regulatory Authority (MEKH) has published its latest figures, which show that natural gas and electricity for private consumers in Budapest remain among the cheapest in Europe, as Index reports.

The most significant change so far this year is the end of the Russian-Ukrainian gas transit in January. One result of this is that Hungary’s gas system and geopolitical position has been strengthened as Hungary has built interconnectors with a number of neighboring countries.

This has tripled the value of Hungary’s gas system,

a source, who requested anonymity and was an active player on the trading side of Russian gas supplies from the Russia-Ukraine gas deal, told Index.

The price of a 1-year contract traded on the Dutch TTF gas exchange has risen by almost 35 percent in the past six months and the price of a 1-month contract by about 9 percent, although the price increases occurred mainly in November and December as the Russia-Ukraine war intensified in colder-than-expected weather and demand for gas increased due to less wind power than expected, Equilor said in an analysis sent to Index.

Péter Szemán, an analyst at Equilor, said it was important to point out that gas prices rose in the first days of January after the disruption of gas supplies, but that a correction had already begun – the price fell from 49 euros/megawatt hour to 38-39 euros/megawatt hour on the Dutch gas exchange TTF.

Nevertheless, the interruption of gas transit could lead to higher gas prices in the short term due to a lack of alternatives.

“The losers in the current situation are Austria and Slovakia, which purchased a large proportion of Russian gas via Ukraine last year. These countries are therefore likely to purchase gas from other sources at higher prices,” says the Equilor analyst.

According to Gábor Regős, chief economist at the financial institution Gránit Fund Management, the reduction in supply and the overall uncertain situation will lead to an increase in gas prices: European countries will both buy Russian gas at a higher price and switch to even more expensive LNG. The interruption of Ukrainian transit does not mean that Russian gas will no longer reach Hungary – as it will continue to arrive via the TurkStream – but it will not be able to meet the demand of the entire region.

The higher price causes competition problems in Europe, but also affects Hungary: the increase in gas prices means spending hundreds of billions of forints in the budget, worsens the current account balance and thus contributes to a further devaluation of the forint, which in turn affects economic performance.

The chief economist of Gránit Fund Management added that the decline in imports from Russia does not negatively affect all players, of course: the US can increase its LNG exports, which provides them with revenue. In the first ten months of 2024 (when Ukrainian transit was still largely functioning), US LNG exports were 150 percent higher than in 2019. Last year, 55 percent of US LNG exports went to Europe, in December it was 69 percent.

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The Hungarian Energy and Public Utilities Regulatory Authority (MEKH) published the international comparison of electricity and gas prices for households for the period up to December last year on Tuesday. It shows that the average electricity price for private customers in Budapest is 9.20 eurocents/kWh. This is the cheapest in Europe, while in Berlin it is more than four times too expensive.

The average price of natural gas for private customers who benefit from the discount is also at the top in Budapest (2.53 cents/kWh), ahead of second-placed Belgrade (4.62 cents/kWh). Consumers in Berlin pay five times more than consumers with a reduced price in Budapest.

Thanks to the reduction in ancillary costs, Hungarian families paid the lowest gas and electricity bills in Europe last year and also in December 2024, the government commissioner responsible for maintaining the reduction in ancillary costs explained on his Facebook page on Tuesday.

According to Szilárd Németh, the year-end comparison is also based on the so-called end-user prices paid by consumers. He added that this includes the energy fee, the energy tax, VAT and the system usage fee and emphasized that Hungarian families were successfully protected from the dangerous effects of the energy crisis and the energy price explosion caused by the war in Ukraine and the “misguided Brussels sanctions”.

Hungarian households also benefited from the safest and cheapest energy supply in Europe last year,

said Szilárd Németh, adding that it was incomprehensible and outrageous that “Brussels and the domestic left constantly want to attack and abolish the reduction in electricity bills”.

“However, we will not give in to them, we will defend the achievements of the utility bill reduction, because for us the safety of the Hungarian people comes first,” the politician said.

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