Hungary’s Utility Costs: Are They Truly the Lowest in the European Union?

In Hungary’s utility cost reduction program, the reality behind the statistics reveals a complex economic picture. A recent Eurostat report shared by KDNP MP János Hargitai claims Hungary has the lowest utility costs in the European Union, but experts caution that these figures require proper context to understand their true significance.

While the utility cost reduction program has indeed lowered monthly bills for Hungarian households, the complete financial picture is more nuanced. The government isn’t magically producing cheaper energy; rather, it’s subsidizing consumer costs with public funds. In the first half of this year alone, the program cost the state nearly 500 billion Hungarian forints – money that ultimately comes from taxpayers themselves.

The government’s assertion about “lowest utility costs” also obscures important details. Following changes implemented in 2022, the full discount now only applies to consumption below average levels. Households exceeding these thresholds face significantly higher rates, creating a two-tiered system.

Further complicating matters is the stark contrast between household and business energy costs. While residential rates appear favorable in EU comparisons, businesses in Hungary face the sixth highest energy costs in the European Union. This discrepancy ultimately affects consumers, as companies pass these elevated costs along through higher prices for goods and services.

Hungary also leads the EU in network charges at €68 per megawatt hour as of 2023, the highest rate across member states. This additional burden further strains the overall energy cost structure within the country.

Energy expert Anna Bajomi points to a critical perspective often missing from government communications: the relationship between utility costs and household income. European Commission data shows that energy bills place a disproportionate burden on low-income Hungarian households, with nearly 15% of their expenditure dedicated to energy in 2024 – the fourth highest percentage in the EU for this income category.

The situation isn’t much better for other economic groups. Lower middle-class Hungarians spend 11.85% of their income on energy (sixth highest in the EU), while middle-class households allocate 9.15% (fourth highest). Compounding this challenge is Hungary’s distinction of having the lowest median income in the EU in terms of purchasing power parity.

Resources outside the utility reduction program present additional challenges. Firewood, which falls outside the government’s subsidized pricing, has nearly doubled in cost since January 2021. For homeowners using wood heating through winter, this represents a significant expense of approximately 194,400 forints as of October.

Hungary’s housing infrastructure exacerbates the situation. According to a Habitat report, Hungarian homes consume nearly 1.5 times more energy per square meter for heating than the EU average. Two-thirds of buildings have an energy rating of G or worse, with single-family homes faring even more poorly – 82% fall into one of the three worst energy classes.

This inefficiency creates a paradoxical relationship with the utility cost reduction program. By artificially lowering energy prices, the government has inadvertently discouraged investments in energy efficiency improvements, as households had less financial incentive to upgrade their properties when subsidized energy was available.

Public dissatisfaction with the current system has begun to surface. In late November, protesters gathered outside the Budapest Electric Works building to voice concerns over high network charges and utility costs, suggesting that despite the government’s narratives about protection and savings, many Hungarians continue to struggle with energy affordability.

While Hungarian utility bills may indeed show lower nominal figures compared to neighboring countries, the complete economic picture reveals that these costs still place a substantial burden on Hungarian households relative to their income levels, challenging the government’s simplified narrative about the program’s success.