“Get off the stock market. We must have Czech electricity at Czech prices.” How to tame expensive energy

On Friday, September 9, European economy ministers are meeting to jointly seek a European way out of high electricity prices. The meeting was called by the Czech Minister of Economy and Industry, Jozef Síkela. It is not entirely clear why the search for a European path should take precedence over the search for a national path, when some EU governments have already found their own way out, or are in the process of finding it.

At Salon Echa, we are looking for solutions with the prime minister’s advisor Jakub Kajzlera well-known lawyer Radek Pokorný and finally with Ivan Novesky. The former first vice-chairman of the Energy Regulatory Office was one of the speakers at Saturday’s demonstration on Wenceslas Square, and since last year he has been bombarding the Czech government with proposals to solve the energy crisis with several energy colleagues.

Why did the so-called European solution to electricity prices take precedence over the national one two weeks ago? What is the real justification for this?

Kayzler: It’s not either or. We work in two directions. A pan-European direction that we must look for as the state presiding over the European Council. Here we feel the need to reach a European consensus, which does not have to correspond in everything to the ideas of the Czech Republic. Let’s say that in the Czech Republic we cap electricity prices for end consumers at, say, 200 euros per megawatt hour. It may be that the European ceiling would be higher, that the measures taken – separating the prices of electricity produced from gas from other sources, capping the prices of gas that is burned in power plants – may reduce the price, but not enough from the point of view of our industry and our households. Therefore, a compatible national solution is still being sought, which would either complement the European one or replace it if no European solution can be found.

What is the shape of the Czech solution to electricity prices?

What does the so-called Blažk proposal look like and what are its weak points according to the working group of the government office?

Can the Czech Republic withdraw from the system of emission allowances?

Will the Czech Republic go the so-called Slovak way with electricity prices?

Novesky: Our group Energy is not a luxury good since the beginning of the year, since Fial’s government has been in power, it has been promoting a solution that the Slovaks eventually took up and which proved very useful for them: the government of the Slovak Republic approved a bill in the spring that would tax 50 percent of electricity from nuclear power plants every month. On that account, Slovenská elektrárna, similar to ČEZ, in which the Slovak government has only 30 percent, agreed on a price cap within just three weeks. They capped the price for households at 62 euros per megawatt hour. It is a solution based on the principle of voluntariness, because each of the participants calculates that it is worthwhile for them to cap their electricity at a certain value and not have the financial office on their backs every month, which could otherwise literally bone them.

Humble: It was certainly not voluntary in Slovakia. It was under pressure. And, Ivan, believe me that when international arbitrations finally come, these questions will be dealt with in great detail. If Slovenské elektrárny has three minority shareholders and they have promised with a handshake that they will not question the electricity ceiling, ok that can change too. If I point a gun at you and tell you to sign something, it is under duress and then the signature may not be valid.

Novesky: You asked about reasonable profit. The Slovakian route applied in our country would mean for ČEZ that, even after taxation, it would retain 100, perhaps even 300 percent of the profit. A reasonable profit in my opinion. I understand that they have to invest, but you can’t justify 6000 percent profit from nuclear electricity.

Couldn’t CEZ be relieved by canceling investments in renewable sources and concentrating on the maintenance of traditional ones?

Humble: I am a lawyer and I cannot discuss what CEZ should do, because it is a client. But what 6000 percent profit? If ČEZ has sold most of the electricity for next year, the average price of these long-term contracts will be estimated at 110, 120 euros. It’s nonsense, the numbers flying around here. The extreme of the last weeks was due to those high deposits, due to which few sellers went to the exchange.

Novesky: Well, that is exactly the reason why our group claims that we must have Czech electricity here at Czech prices. For two years, we have been warning that as energy sources are limited, the stock market ceases to function. The Germans cut resources as part of their Energiewende, which is the beginning of our problems today. The French now had their nuclear reactors shut down, they are hastily putting them back into operation, who knows how it will all turn out for them. But without an offer, the stock market loses its meaning, i.e. the prices on it start to fly unacceptably. That is why we say that CEZ should sell on the stock exchange, but only what is not consumed in the Czech Republic.

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The article is in Czech

Tags: stock market Czech electricity Czech prices tame expensive energy

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