A strong demand for CEZ´s products leads to electricity price reduction for 2005, compared to the originaly released indicative prices

Based on the analysis of the demand for offered products for 2005, CEZ Power Company has reduced selling wholesale electricity prices for the next year for all prospective buyers, compared to the originally released indicative prices. The overall year-on-year increase will thus be half the value of the electricity prices on neighbouring markets and will reach the amount of less than 11 per cent, compared to the indicative increase of 15.6 %. The lower price rise, compared with foreign countries, will bring higher competitiveness of Czech companies.

The electricity prices abroad grow faster than in the Czech Republic. The dynamics of increase in prices in the Czech Republic is roughly at half level the EU countries. Thus, CEZ continues to fulfil the positive role in the process of stabilization and industry promotion and is also going to perform it in the future, because it is able to keep the competitive prices for a number of the following years, even lower and in some areas even markedly lower, compared to the rest of Europe. The price stability is backed up by the fact that the power electricity price from CEZ will be only 10 per cent higher than in 1992, which is after 13 years.

The power electricity prices in the Czech Republic are demonstrably the lowest of the prices in the neighbouring countries. The expected prices for next year in Germany are 21% higher, in Austria 21% higher, in Poland 15 % higher, in Slovakia 10 % higher, and in Hungary 25% higher than the power electricity prices from CEZ.

The positive role in the process of industry promotion is supported by the fact, that real electricity prices today (inflation rate influence included) are still much lower than in the last years. They are half the real prices in 1992. Another real price reduction is now hardly sustainable, because the new power plant constructions, which the Czech Republic is now ahead of, will not redeem at the present price level.

The amount of electricity ordered by our customers shows a high competitiveness of the offer of CEZ Power Company. Although the customers responded to the original indicative offer with the price increased by 15.6 %, they have ordered a higher total amount of electricity than in the previous year. The final price has been reduced, similarly to the last years, due to the ordered amount, when the fixed cost is diversified in a larger amount. According to the opinion of CEZ, the negotiation price which was set higher provided against speculative purchasing of electricity aimed to sell it with high gains on foreign markets, and protected the inland electricity market from consequent more expensive imports.

CEZ accounts for a less than 60 % share in the Czech consumption on the inland market. The remaining part is supplied by independent producers. Their price policy is similar and represents the above mentioned reality.

The price of own so called power electricity accounts for only one third influence on the total price for households. The other items are prices for transmission, system services, support of renewable sources, distribution and VAT.

Ladislav Kriz, Press Officer, CEZ, a. s.

7. 9. 2004