CEZ applies for electricity price increase

TIRANA, September 6 – CEZ, the Czech company which owns the majority stake in the privatized Albanian power distribution operator (OSSH), has applied for an increase in electricity prices in 2011, the Energy Regulatory Entity (ERE) has confirmed.
ERE, which is the decision-making body on electricity prices, says it will officially unveil CEZ’s request for price increase on September 12. State-owned Albanian Power Corporation, KESH, is also reported to have requested price increases for electricity tariffs. According to Bujar Nepravishta’s, ERE’s head, the regulatory agency will hold a hearing with interest groups at the end of November before announcing its final decision on December 15, 2009.
Speaking in an interview this week, Nepravishta said he was confident electricity prices would not increase in 2011. “Price increases are first of all affected by electricity losses, the amount of investments and the company’s capacity utilization rate.”
He said the construction of hydropower plants would liberalize the Albanian electricity market allowing household and business consumers to sign contracts with other private operators.
According to the country’s national statistics institution, INSTAT, losses in the electricity grid rose in the first half of 2010. Electricity losses increased by 3.7 percent reaching 1,285 GWh, accounting for 27.2 percent of power available for use. Distribution losses make up the major share of 88.9 percent of losses in the electricity grid.
In a statement issued on Monday, ERE described as untrue media reports saying that ERE had announced price increases for 2011.
“As an independent institution, ERE assures consumers it will assess every application on prices and tariffs with impartiality, transparency and high professionalism protecting consumers from every possible abuse that could be targeted by the monopoly position of electricity supply.”
Last Year, CEZ had requested a 24 percent price increase in electricity for 2010 but the Energy Regulatory Entity approved only a 13 percent increase which entered into force starting from January, 1 2010.
Albanian households currently pay 7.7 lek/kWh for up to 300 kWh a month and 13.7 lek for every kWh they consume above the 300 kWh threshold.
In March 2009, CEZ, signed a contract with the Albanian government after buying 76 percent of OSSH’s state-owned shares for 102 million euros.
Praising improvements made to Albania’s electricity distribution system under the management of CEZ, which has invested nearly 60 million euros in consumption measurement and maintenance of network, Economy Minister Dritan Prifti promised earlier this year legal support to eliminate abuses.
The privatized distribution company serves to nearly a million of customers and its annual gross electricity supply amounts to 5.3 TWh.
CEZ Group has long-term experience with distribution companies restructuring in the Czech Republic, Bulgaria and Romania.
CAO protests
The Citizens Advocacy Office (CAO) has described OSSH’s application to increase electricity prices in 2011 as absurd. In a protest staged last Sunday, CAO’s executive director Altin Goxhaj said OSSH had not met the performance conditions to reduce electricity losses and improve service. He said that OSSH’s request to increase prices by another 15 percent was absurd at a time when the domestic electricity production is at maximum efficiency.
“Last year’s increase of 12 percent was excessive and does not justify another new increase,” said Goxhaj.
The watchdog also described as absurd the Albanian Power Corporation (KESH) application for price increases considering the country’s favourable hydropower situation.