CEZ’s head of sales, Alan Svoboda, said yesterday that CEZ will increase its net electricity production (gross electricity production less own consumption) to 57 TWh, which was a record high reached in 2004 against 55TWh in 2005. The growth is based on increased GDP growth in the Czech Republic and CEE region enhanced by expected closures of capacities in Poland, Hungary and Slovakia. To meet the increased production, CEZ would have to buy more CO2 allowances in particular in 2007 nevertheless some of the requirements may by covered by CER (Certified Emission Reductions). CEZ’s gross electricity production equalled 59.5 TWh in 2005 (-3.5% y/y) in particular due to reduced production in the NPP Temelin (-14% y/y) leading to a drop of 6.1% y/y to 24.7 TWh at the nukes. The drop was a result of shutdowns at NPP Temelin in the 1H05. The electricity production drop in 2005 is in line with our and market’s expectations. At the same time, we have also assumed at increased production going forward by 1.3% p.a. Therefore, we would view the news are neutral nevertheless we may be too conservative regarding electricity production growth going forward. We reiterate our Buy recommendation.