The wholesale auction of energy products "Duhova energie" proved a hunger for electricity

CEZ Company has today concluded the wholesale auction for electricity supplies in 2006. The auction was called after the recent auction of the virtual power plant, which had been ordered by UOHS (Office of Fair Trading), and proved a hunger for electricity in the Czech Republic again. The total electricity sales, including contracts that have been concluded about the virtual power plant, has increased by 1.6 TWh i.e. 4.1 % on last year. Based on the high demand and convenient structure of demanded products, CEZ has been able to reduce next year´s wholesale electricity prices for all prospective buyers compared to indicative prices introduced originally. The total year-on-year increase in a price of demanded volume in a particular structure is 14.3 %. The price is in accordance with the price level, which had already been given by the previous auction of the virtual power plant.

The electricity volume that has ordered shows a high competitiveness of CEZ Power Company´s offer. Based on the ordered electricity volume and the structure, CEZ has been able to optimize better the setting of its production capacities and has reduced the final prices of some products in the range from 0.1 % to 2.1 %, compared to the originally published ones. The price of the basic year zone, so called yellow energy, has been slightly reduced to 1041 CZK/MWh.

The increase in traders´ demand for our electricity is higher than the increase in the domestic demand, although in general other independent producers have also sold their electricity. It follows that a part of the traders calculate upon exporting electricity abroad for attractive prices. However, domestic customers do not have to be in fear that there would remain only expensive electricity on the market, said Alan Svoboda, sales director of CEZ. The year-on-year increase in wholesale prices is markedly lower than on foreign markets, which will improve competitiveness of Czech companies.

This year, 4 other traders operating on the Czech market participated in the electricity auction for the first time. Total 9 subjects, besides CEZ Group, demanded electricity in the auction. The rise in the number of prospective buyers together with the high demand in the auction of energy products Duhova energie and virtual power plant reflect improving competitiveness on the market of electricity sold to end customers and anticipation of interesting export opportunities.

The wholesale electricity price makes up ca one third of the resulting price for households. The other items are for example transmission and distribution fees, system services, support of renewable resources and VAT. Their increase is influenced mainly by inflation and grid development. Next year, the fees will reflect, for the first time, also costs of so called unbundling, which is a separation of electricity supply and distribution as required by the EU guidelines. Regulated services will be fixed by ERU at the turn of October and November this year. The increase in wholesale electricity prices is, however, in accordance with ERU estimates, which were used to assess the growth in final prices for households. Their growth should not exceed 10 per cent.

CEZ's share on the domestic market is over 65 per cent of the Czech consumption. The remaining part is supplied by independent producers.

Besides orders of traders, CEZ also looked at electricity volume that is necessary for supplies to end customers of CEZ Sales, which is going to take over an exclusive responsibility for sales to end customers in CEZ Group from next year.

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

23. 8. 2005