Household electricity prices expected to increase by 6 to 8% in 2007

Daily Pravo inform that CEZ could increase electricity price for households by up to 6 to 8% in 2007. In addition electricity price for households will further increase as of 2008, as a new excise tax will be introduced.

Our view:
These estimates are in line or only slightly above the first indication of wholesale electricity price increase from virtual power plant auction from the beginning of August (+17.1% y/y), with higher end of the range achievable given that other items increase. Note that electricity price for households doesn’t depend only on wholesale electricity price; it forms only about 1/3 of final price for households. Other 2/3 are formed by taxes and fees for distribution, system services, contribution fee on renewable resources etc. and will be set by sector regulator in November depending on inflation, costs of unbundling and other items.