KESH applies for power price increase

TIRANA, Sept. 25 – Albania’s Energy Regulatory Entity (ERE) has called for additional information on the performance of the state-owned power utility KESH before examining a request for price increases to the distribution operator CEZ Shperndarje. ERE’s board of commissioners said detailed information on KESH’s hydro generation, investment, export income was needed before starting examining a request for price change.
State-owned transmission system operator OST and CEZ Shperndarje distribution operator are also expected to file requests for price increases. However, under a previous ERE decision, power prices for household and business consumers will remain unchanged for the 2012-2014 period.
In a recent decision, ERE has also refused a request by CEZ Shperndarje to put its assets as collateral under a Euro 100 million loan from the EBRD and the IFC. ERE sources said the approval of the request would endanger the energy system and would accept the request only if new investments were placed as collateral.
Last June, Albania’s Energy Regulatory Entity (ERE) lowered power prices for Czech-owned distribution operator CEZ Shperndarje by 23 percent after losing a legal battle with the company on the bad debt and continuous complaints about the unaffordable prices risking investments and CEZ’s presence in Albania
ERE decided to lower power prices state-run corporation KESH charges on CEZ to 2.2 lek kWh, down from 2.84 lek kWh since Jan. 2012 when CEZ suffered a 90 percent increase in tariffs.
While CEZ Shperndarje will see its profits rise and be able to continue with its investment plans, power utility KESH, already in severe financial straits because of a sharp drop in hydroelectricity generation, will be the hardest hit from the latest decision which will have its impacts extend from Jan. 2012. KESH will be stripped of USD 33 million a year from the decision, experts estimate.
The decision followed a visit by Czech Prime Minister Petr Necas as CEZ was facing severe financial difficulty from the ERE decision and expensive power imports.
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.