Electricity price in Slovakia is one of the highest in the EU
Week in Slovakia
Case: Electricity prices in Slovakia
Slovakia has one of the highest electricity prices for companies in the whole EU. The final price besides other also includes support for mining and private investors in the field of renewable energy sources and combined heat and electricity generation. „Electricity consumers club together 322 million Euro for some of the electricity producers and support for domestic coal in 2011,” calculated the analytical unit at the Ministry of Finance. According to the Institute of financial policy (IFP), without these subsidies the price could have fallen this year.
The tariff for operating the system is decisive in the end price
The fastest growing part of the regulated fees, which is also responsible for increasing electricity prices for households in Slovakia during this year, is the so called system operation tariff (TPS). It stands for approximately 10,6 % of the end price for electricity. From an environmental point of view this tariff represents a paradox, warns the IFP. The fact it that all the consumers support not only renewable sources by paying the tariff, but also non-ecological coal. Annually the TPS has increased by 236 % from 6,3 Euro per Mwh last year to 14,85 Euro this year.
According to analysts from the Ministry of Finance, the electricity prices for Slovak companies is in long term way above the average of all the EU countries. According to data information from Eurostat, during the first six months of 2010, the electricity price for a company with an average consumption was 26 % higher than in other member states and second highest just behind Cyprus
Growing competitiveness could push the price down
The end price for companies and households could be lowered and brought closer to the European average by the growing competition on the market according to the IFP. New suppliers on the market are able to compete with the traditional suppliers with a markedly lower wholesale price for electricity, which accounts for around 50 % of the end price. But the rest are regulated fees, which are set yearly by the Regulatory Office for Network Industries (ÚRSO).
„The possibilities for lowering the end price are thus limited by the fees in the segment of distribution and transmission where natural monopoly exist, such as operators of the distribution system and the Slovak Electricity Transmission Network,” warn the analysts from the Ministry. A comparative study from the Association of Transmission Systems (ENTSO) points out that Slovak tariffs are among the highest in Europe. „High fees that cause high end prices can discourage new subjects from entering the market and slow down development of competition. Therefore it would be vital to support the legitimacy of their rates in a similar analysis,” adds the finance resort.
Monday – 14th February 2011
The European Bank for Reconstruction and Development (EBRD) granted the Czechoslovak commercial bank (ČSOB) a loan worth of 15 million Euro. The money is designated to finance projects in the field of energy efficiency and it will be allocated within the financial scheme Slovseff.
Slovakia will further remain without interconnecting electricity cables with Austria. The Slovak Electricity Transmission System (SEPS) does not count in it plan for year 2012- 2021 with construction of wiring between the two countries. But in the past couple of years the company did consider the possibility of constructing connection between Stupava and Vienna and Podunajské Biskupice and Vienna.
The Regulatory Council has chosen the chairman and vice-chairman for the Regulatory Office for Network Industries SR (ÚRSO). Starting off on February 17th, Dušan Bernáth will be the new chairman and Vladimír Čepka vice-chairman. Both candidates were now proposed to the government.
Tuesday – 15th February 2011
A new small hydro power plant could be built near by Žiar nad Hronom. The power plant construction is being planned by the company ZUS servis. According to the investment plan, which was proposed by the company for the Environmental Impact Assessment (EIA), the small hydro power plant with three turbines should generate approximately 5,6 Gwh of electricity per year on the river Hron. The costs are estimated at 5 million Euro.
Consumers are afraid that prices for heat could increase. According to the Association of consumer subjects of Slovakia, the price rise should be caused by the planned privatization of the six biggest heating companies.
One of the main agreements of the meeting of V4 countries and German Chancellor Angela Merkel during the meeting in Bratislava was that energy security should be based on solidarity.
Wednesday – 16th February 2011
Smer-SD wants to adopt a law that would declare heating companies as strategic property of the state and outlaw selling not even 1% of their shares. Chairman of Smer-SD Robert Fico is radically against privatization of the heating companies, which are according to economic analyses able to function even without participation of foreign ownership. Moreover, he is afraid of a rapid price increase. According to Rober Fico already now we are paying incomparable more than is usual in Europe, up to 25 % of the average income of a Slovak household.
Selling a whole package of shares of the heating companies will be according to the Minister of Economy Juraj Miškov more profitable for the state. How many percent will the state eventually sell should be decided according to an analysis. The Minister was not able to specify when this analysis on the privatization procedure could be finished.
Czech-Slovak daily market with electricity will be extended. Operators of the transmission systems and organizers of the electricity market in Czech Republic and Slovakia have agreed that they will adopt the method of evaluating the daily market which is currently being used in the region of Central and Western Europe. This should enable them to widen their activities in this region.
Minister of Economy Juraj Miškov offered to the Minister of Energy of Russian Federation Sergej Ivanovič Šmarkov during their talks the possibility for Russian companies to take part in investment projects in Slovakia. He stressed that Slovakia expects investments with a higher added value mainly focusing on building a knowledge economy.
Regional structures of two political parties, KDH and Smer-SD in Trnava raised voices against selling 100 % shares of the Trnava heating company. According to major of Trnava Vladmír Butka (KDH) by doing so, the Minister of Finance will solve the financial problem only instantly, but in the end, it will be the residents of Trnava, who will pay for the purchase price together with interests.
Thursday – 17th February 2011
State Secretary at the Ministry of Economy Martin Chren stepped down from his function. According to his words, it was a private decision that he has made willingly and without pressure.
The Regulatory Office for Network Industries SR (ÚRSO) will pay special attention to the quality of services offered by energy suppliers. The Office has already proposed amendments on regulations that toughen quality standards for the subjects it regulates. The companies have to adhere to the standards so that the customer received adequate quality for the price he pays for electricity, heat or natural gas.
Friday – 18th February 2011
Austrian company Energie Steiermark AG is also interested in the privatization process of the six main heating companies in Slovakia and it plans to join the competition if it is once announced and agreed upon in the government.
Igor Matovič, leader of Obyčajní ľudia has not decided yet how he will vote on the issue of privatizing the state heating companies. He wants to decide based on pragmatic arguments. But he added that the state can be a responsible owner. The Slovak National Party (SNS) is also against the plan to sell the companies to foreign investors. However, SNS want to change the proposal of Smer-SD so that it would handle the heating companies to communal ownership.
European Union and World
Monday – 14th February 2011
In January 2011 100-thousand customers in Czech Republic decided to change their electricity or natural gas supplier. During the first month of the new year almost 65.000 customers and mainly households, but also thousands of small businesses decided to choose an alternative electricity supplier.
Polish capital Warsaw plans to sell a majority share in the town´s heating company SPEC. The privatization process should be concluded already in this year. The value of the company is estimated at 750 million Polish zlótych.
Natural gas from the Siberian deposit Kovytka could be exported to the perspective Asian market mainly into countries as China or South Korea. The condition however is to construct the necessary energy infrastructure, which despite the of plans of the Russian government, but also Western extraction companies, failed. The solution could be the auction of an extraction license which will start on February 15th.
Tuesday – 15th February 2011
Estonia, Latvia and Lithuania require help from Brussels in their effort to become part of the electricity network of EU. Despite their membership in the Union these countries are still part of the Russian electricity network with the only exception of Estonia which has a connection with Finland.
Czech company Škoda Power became the supplier of a steam turbine for the electricity power plant that burns biomass in Finland. The total installed capacity should reach 46 MW and the power plant should cost 300 million Czech crowns.
At the end of 2010 Gazprom has made an agreement with its long-term contractors to adjust the prices for natural gas. This information was revealed in the quarterly report of the Russian monopoly. The main reason is a weaker demand as well as low prices on the spot market.
Wednesday – 16th February 2011
At the end of February Austria will hold a plebiscite on secede from Euratom. The whole event is organised by Austrian anti-nuclear organization, which consider the membership of Vienna in Euratom as a waste of resources from Austrian tax payers.
The increasing interest in electro-mobiles is according to the Czech branch of Greenpeace a positive trend. However, using these cars will only have a real meaning if they are fuelled with electricity generated from renewable sources.
Azerbaijan wants to increase its natural gas extraction. By 2020 it want to double its current volumes. In the final phase the country could extract 50 billion cubic meters per year.
Thursday – 17th February 2011
The French company EDF is considering to build a nuclear power plant in Poland. EDF is allegedly proposing to build the nuclear block as an alternative to modernizing the coal power plant Kozienice, which the Polish government demands is EDF want to buy a majority share in the company Enea.
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