According to CEZ, wholesale electricity price for 2007 will rise by less than the Virtual Power Plant (VPP) result, which showed an increase of 18.5% y/y and 17.1% against 2006 level increase to CZK1,220/MWh (EUR42.4/MWh); essential the wholesale electricity price is capped by the virtual power plant result, according to CEZ. The result of the wholesale auction should be known by August 30.
Our view:
Except for base-load forming c85% of the wholesale electricity production, which maximum price CEZ set at CZK1,248/MWh (EUr43.4/MWh) implying a growth of 20% y/y, CEZ will also auction other products, where the demand is lower and the increase is capped at 10.8% y/y. The statement is in line with our and market’s expectations of 15% y/y increase in the wholesale electricity price to CZK1,200/MWh (EUR41.7/MWh). We expect similar statements and speculations about electricity prices for 2007 to come more often before the auction’s result. We see the news as neutral.