In the past two years, the energy markets have experienced the biggest fluctuations in the last few decades, leading to an unprecedented period of record-breaking prices. Prices of some commodities rose more than tenfold compared to the long-term average.

The high gas and electricity prices heavily impacted consumers on the free market and house-holds with retail prices connected to wholesale alike. Europe witnessed numerous government interventions to the market with the intention to protect those segments that they considered most vulnerable. Well before the Russian invasion, in October 2021, the EC published a com-munication on ‘Tackling rising energy prices: a toolbox for action and support’ , offering a toolkit of measures for member states to ease price pressure. This included authorizing tempo-rary deferrals of bill payments, providing direct state aid to companies, and allocating emer-gency support for energy-poor consumers.  The V4 countries applied different tools to protect their households and consumers, partly with temporary measures and sometimes with an ur-gency that did not allow for a thorough impact assessment or fine tuning. The price caps and untargeted support measures had their unintended consequences, eg. the price cap on gaso-line and diesel in Hungary led to increase demand and finally to shortage on gas stations. The price cap therefore had to be abolished to bring the supply and demand to balance again. Sim-ilarly in the Czech Republic the price ceiling for households was set at 100% of their electricity and gas consumption, which wasted an opportunity to motivate households to save energy.

The expenditure of the individual V4 countries to protect households and companies from the effects of the energy crisis was highest in share of GDP was about 4% in Czechia and Slovakia, and much less, between 1.5-2% in Poland and Slovakia.

 
This study aims to collect the fiscal and regulatory interventions to the V4 energy markets dur-ing the last two years with the intention to help us understand the intentions behind certain measures and to collect the lessons learned.

We see that the VAT reduction, was not applied by Hungary but by all other V4 countries. The retail price cap was applied by all but in a very different way: Hungary increased the price by introducing a two-tier system, while the others rather decreased the prices. As a direct conse-quence the demand response to the crisis was most successful in Hungary. We also saw a lack of targeted support to the most vulnerable groups in Czechia and Hungary, and more efforts but still not very poverty-related targeting in Slovakia and Poland. Windfall taxes were intro-duced in all countries, but we saw no evidence how these were used to finance the retail market subsidies.

The common recommendations for all V4 countries are the following points

• Priority should be given to targeted support instead of wide support measures.
• The protective measures taken should be in line with the low-carbon transformation and EU emission targets.
• Structural support for increasing resilience is desirable (energy saving programs, strengthening energy self-sufficiency, etc.)

The paper was part of the V4ETTP 2023 programme supported by the International Visegrad Fund.