KESH submits application to triple tariffs for CEZ

TIRANA, Oct. 12 – State-owned power corporation, KESH, has proposed raising electricity prices for CEZ Shperndarje distribution operator by 3.4 times compared to the current tariff. The proposal submitted to the Regulatory Energy Entity foresees increasing the tariff to 5.03 lek/kWh, from 1.48 lek/kWh currently.
KESH director Engjell Zeqo says that last year’s decrease of tariffs by ERE caused the state-owned company millions of euros in damage. “The request may seem high because first of all the damage caused this year has to be compensated under the regulation, and as we said earlier the assessment can’t be carried based on the results of the production in a single year because a dry years like this can come and you can see the situation for yourself,” Zeqo told reporters this week.
KESH argues that in the newly proposed tariffs 90 percent of the cost accounts for the cost to purchase electricity, 6 percent is the compensation ERE should make for lowering prices this year and the remaining 4 percent includes the personnel costs.
The water level in the Drin cascade where the three biggest hydropower plants are situated is at 270 metres, only 5 metres below the minimum quota. However, with rainfall expected to rise, the situation is considered optimal in this dry year.
KESH has spent around 25 million euros for electricity imports this year. The sale of four small-and-medium sized hydropower plants next year is expected to reduce domestic electricity production by 6 percent. Economy Ministry sources say the tender for Ulez and Shkopet HPPs on the River Mat, in northern Albania, and two small HPPs on the Bistrica River, in southern Albania is expected to be held early next year.
Last December, Albania’s Energy Regulatory Agency (ERE) decided to keep electricity prices for 2011 unchanged, turning down requests by the three local operators who had wanted to increase power prices by an average of 12 percent.
ERE’s board of Commissioners decided to continue applying the two-tier price level, under which Albanian households will pay 7.7 lek/kWh for a consumption of up to 300 kWh a month and 13.5 lek for each kWh they consume above the 300 kWh threshold.
However, the ERE decision obliged state owned electricity producer KESH to sell energy to private distribution operator CEZ at 1.48 lek kWh starting from next January, down from 2.03 lek currently, considerably increasing the Czech company’s revenues which had desperately demanded price increase to handle rising costs and new grid investments.
Albania’s power distribution operator, CEZ Shperndarje has also applied for a 4.5 percent increase in electricity prices for next year citing high inflation rates, increased price of imported electricity and rising power meter costs.
The application has already been submitted to the Energy Regulatory Entity (ERE) which is the decision-making body, but will have to undergo public hearings with all interest groups before ERE takes its final decision early next December.