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Energy bills to rise 10 percent

Production limits and rising demand are pushing up prices

By Victor Velek
Staff Writer, The Prague Post
November 28th, 2007 issue

Households should save more money for next year’s electricity bills.
In 2008, average electricity prices for households will rise 9.1 percent compared with this year, the Energy Regulatory Office (ERÚ) announced Nov. 26.
This increase does not include the new environmental tax, which comes into effect Jan. 1 and is levied on power from nonrenewable sources. The tax will raise prices another 1 percent on average.
The price of electricity distribution and related services — the portion of the overall power price regulated by the ERÚ — will grow 1.7 percent on average, said ERÚ head Josef Fiřt. That rise is slower than predicted inflation for next year, Fiřt added.
In contrast, the market-based, unregulated component of the electricity price, which constitutes about 55 percent of the overall price, will rise 15.2 percent, according to the ERÚ.
Despite the averages, electricity expenses next year will vary greatly, with households spending anywhere from 6 percent to 20 percent more, according to ERÚ calculations. The actual rise in electricity bills will strongly depend on whether households use electricity for heating and on their electricity providers.
While ČEZ, the country’s largest power distributor, will increase its prices 8 percent on average, other major suppliers announced more rapid increases.
German power company E.ON, serving residents of south Bohemia and south Moravia, will increase electricity prices 11.1 percent. And average prices in Prague, provided by distributor Pražská energetika (PRE), will rise 10.2 percent.
Although competition among power companies might soften the increase, some distributors have already ruled out price adjustments.
“We won’t adapt our prices,” said PRE spokesman Petr Holubec. “We have no production facilities and are wholly dependent on prices set on the energy exchange.”
Wholesale power prices have risen across Europe, a result of the tension between high demand for electricity and insufficient production capacities, according to David Marek, an analyst at Patria Finance.
“The electricity price hike reflects limited European power production capacities and rising demand for power stemming from a solid overall economic growth in Europe,” he said.
Given the steady economic growth and uncertainty about construction of new power plants, electricity prices will likely to continue to grow in the midterm, Marek said.
This might transform the Czech Republic from a net exporter of electricity to a country dependent on power imports. Some experts project that, due to its growing economy, the country will become a net power importer in 2015 at the latest.

Victor Velek can be reached at vvelek@praguepost.com


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