ERE expected to offer CEZ lower power prices

TIRANA, June 25 – A recent Tirana District Court decision in favour of the bad debt private CEZ Shperndarje distribution company claimed, will force regulatory watchdog to review downward the power tariffs state-owned KESH charges on CEZ. The court has ruled the bad debt stands at 16.5 percent and not 14 percent as ERE claimed.
The decision which is not expected to affect household and business consumers, will probably lower power prices for CEZ Shperndarje to 2 lek/kWh, down from 2.8 lek since Jan. 2012 when CEZ suffered a 90 percent increase in tariffs.
The decision is expected to severely affect state-owned KESH which has faced severe financial difficulty to secure power imports in early 2012.Experts estimate the expected decision to lower power prices means a loss of Euro 80 million for KESH.
Last December, government authorized KESH to borrow 4.5 billion lek (around Euro 32 mln) for electricity imports, and later awarded the company 2 billion lek (Euro 14 mln) from its contingency funds to handle imports for February and March as an emergency situation caused by heavy snowfall was created in the country’s northern and southeastern areas.
The decision is expected to considerably improve the finances of CEZ Shperndarje which warned it could face losses of up to 10.15 billion crowns ($523 million) over the next three years because of the ERE decision on electricity tariffs in Albania.
Under the ERE decision dated Dec. 15 CEZ Shperndarje was forced to buy electricity from KESH at 2.83 lek kWh starting from Jan. 1 2011, up from 1.48 lek kWh in 2010, making it 91 percent more expensive for CEZ.
Last March, Czech Prime Minister Petr Necas visited Albania as CEZ was facing severe financial difficulty from the ERE decision and expensive power imports.
“I guaranteed Prime Minister Necas that we are fully interested in CEZ’s success and agreed to cooperate in order to achieve a success story in the best interest of Albanian consumers and CEZ corporation in Albania,” said Prime Minister Berisha, adding that a final solution was close.
The Czech side is aware of a number of problems and misunderstandings but believes that they can be overcome by negotiations, Necas stressed at the press conference.
CEZ had called on the World Bank to resolve the situation. Or else, it would demand the guarantees for EUR60m the World Bank had provided for the investment in the Albanian distribution network.
While household and business consumers will face no power price increases for the next three years, CEZ Shperndarje was the hardest hit from the latest decision by energy watchdog, ERE. CEZ warned its investment plans were being endangered by the decision.
CEZ Shp쳮darje, a subsidiary of ČEZ Group since 2009, owns and operates the entire 110kV distribution network in the country for a total length of 69,000 kilometers, serving around 1.1 million customers. CEZ took over former state-owned OSSH in March 2009, when it signed a contract with the Albanian government buying the majority 76 percent stake for 102 million Euros.