The government allocated for CEZ 34.3m tons of CO2 credits for the period of 2008-2012 (NAP II.). The total quota for Czech Republic approved by EC is 86.8m tons which is 14.8% lower than requested. The allocation plan has to be approved also by EC and the outcome is expected in about a month time. Our view: As we mentioned previously, we expect that CEZ will not have enough credits for the second allocation period. Company is expected to buy about 3m credits annually for 2008-2012 period. Note that CEZ started to buy CO2 credits early this year when the price of CO2 credits has been below EUR 20 per ton. The current price of CO2 credits for 2008 is EUR 21.7 per ton. The higher CO2 cost should be offset by higher electricity prices.