CEZ Unveils 11.9% electricity price increase application

TIRANA, Sep. 20 – The electricity distribution operator (OSSH), whose majority stake is owned by Czech Republic’s CEZ, has announced it has applied for a 11.92 percent price increase for 2011 to cover the company’s rising costs but the final decision is up to the Energy Regulatory, the decision-making body.
CEZ says another price increase is necessary to justify the company’s current investments in the distribution system and make new ones where necessary.
“Our goal is to be in a situation where OSSH will not need to increase prices based on higher company costs. This can be quickly achieved but only through changes and massive improvements in the company’s operations and investments,” said CEZ in a statement, stressing the need for higher prices to continue scheduled investments.
CEZ invested 3.9 billion lek around (39 million dollars) in 2009 after buying 76 percent of OSSH’s state-owned shares for 102 million euros.
This year, investments are expected at 4.5 billion lek compared to 4.9 billion in 2011.
CEZ announced its application for price increases earlier this month but the amount was unveiled only last weekend.
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 earlier this month, 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.”
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.
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.
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.