Czech energy market, restructuring and liberalization, CEZ as dominant CEE power company

7. May 2012. / Uncategorized

Historical development of CEZ energy group and how influential they became in CEE Europe

The Czech Republic began restructuring its electricity industry in 1992. The former CEZ was broken up into a dominant generator Czech Power Company (CEZ), which also operated the transmission network, and 8 regional distribution companies. All 9 companies were transformed into joint stock companies, and CEZ was 30 per cent voucher privatized in the same year. In 1995, foreign investors and municipalities received minority stakes in the regional distribution companies.

Although privatising the majority of shares of CEZ was, for a long time, the intention of the Czech Government, the deal has not been realized as yet because of unsuccessful bidding rounds. At present the restructured CEZ has an expansive growth strategy. As the second largest exporter of electricity in Europe, CEZ intends to become the dominant regional electricity company in CEE.

Before January 2001, the contractual relations of the Czech electricity industry were organized according to the purchasing agency model. This means that the CEZ, who also acted as a monopoly provider of transmission and power dispatch, retained the statutory monopoly over the wholesale activity. There was no third party access to the grid; neither domestic producers nor generators abroad could sell power directly to the distribution companies or end-users of electricity. Similarly, there was no open access to the distribution lines.

After adopting the State Energy Policy Guidelines in 2000, the Energy Act (458/2000) came into force as of January 2001, which set the regulatory framework for the energy market liberalization. The Act was amended by the Act 256/2003. Unbundling of the TSO is in a contradictory stage in the Czech Republic. CEPS is the licensed transmission operating company of the Czech Republic. Until April 2003, CEPS was 100% owned by CEZ. By April 1, 2003, 51% of the shares of CEPS was transferred into the ownership of the state company Osinek, and another 15% stake into the ownership of the Ministry of Labor and Social Affairs of the Czech Republic. The Ministry of Industry and Trade of the Republic was appointed as the administrator of the shareholders rights (CENTREL, 2004). The principles of CEPS

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