The auction results confirmed the price relations in the neighbouring countries

We were not much surprised by the final price, as we have recorded deals with similar prices at the very commodity exchange as well as at the electronic trading system TFS in the Czech Republic already before. Over the past few weeks, SE auctions and other important deals have also taken place in Slovakia, a country which is closely connected to our power grid, namely with prices at the level of 42 to 44 EUR/MWh, which represent a year-on-year increase of up to 19 %, commented on the auction results Alan Svoboda, Sales Manager CEZ.

The demand exceeded the offered capacity five times. The auction was attended by local and foreign traders´ representatives, suppliers to end customers and authorized customers by themselves.

The high interest in the auction proved the fact that hunger for electricity is getting stronger throughout Central Europe. The anticipated decrease in production capacities in the whole region and quickly rising demand for electricity are thus evident, said to that Alan Svoboda, Sales Director of CEZ, and continued: the Virtual Power Plant auction results, as well as other already realized deals in the region, are an important signal for the remaining wholesale deals for 2007.

The decrease within Centrel countries (Czech Republic, Slovakia, Poland and Hungary) by 2020 is estimated at 20,000 MW (almost 30 per cent) of the installed capacities. Already next year, 8 TWh will probably diminish from the Czech-Slovak market due to the increase in consumption and production sources shutdowns. That is a significant impact on the balance and it can lead to the west-directed export restrictions. It will require not only massive investments into sources renewal, but also, and mainly, into the construction of new capacities to ensure covering the demand for electricity in Central Europe.

The costs of electricity alone make up ca one third of the resulting price for households. The remaining part consists of taxes and fees for distribution, transmission, system services, support of renewable resources, etc. These fees will be fixed by ERU at the end of this year; their amount is influenced, for instance, by inflation, unbundling costs, rising renewable resource benefits, and distribution assets which are rising due to the grid development.

CEZ called the auction for the second time already according to the decision of the Antitrust Office, which allows CEZ to keep its majority share in Severoceska energetika, and which orders CEZ to allow access to its electricity production capacity in the total amount of 400 MW, reduced to 240 MW during summer months (June, July, August), for independent subjects in 2006-2007. The Virtual Power Plant is offered by auction by units in the amount of 50 MW, res. 30 MW in summer months.

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

4. 8. 2006