Montenegro: New electricity prices favorable for A2A, the company is staying in Montenegro and awaits power market price forming in 2013

, SEE Energy News

The Italian company A2A has no intention of withdrawing from the ownership and management structure of the Electric Power Industry of Montenegro (EPCG) because the last decision of the Regulatory Agency for Energy (RAE) created conditions to reduce losses and increase revenue. The A2A is satisfied how things are developing with the prices when it comes to the biggest industrial consumers, including the Podgorica Aluminum Plant (KAP) and Niksic Steelworks Toščelik.

A2A has been managing EPCG ( Energy company of Montenegro) for three years and is a minority shareholder with 43.7 percent of its shares.

“We welcome the decision of the RAE from a few months ago, which defines a new methodology for determining the price of electricity tariffs, which are gradually increasing. Rates are adjusted to those in other European countries and, if properly applied, they can create conditions for new investments” says in a response by Giuseppe Mariano from A2A service for public relations.

The Italian company, which can not boast with investments in Montenegro has so far justified their lack of investment with unfavorable price of electricity that is determined by the RAE. With praising RAE decisions they show that they favor new policies on electricity prices. The non-governmental sector says that when they adopted a new methodology according to which prices increased in August this year, they are created it to please the investors.

NGO representatives who were following the decisions of the RAE, deem that the prices were established illegally and are unacceptably high in relation to salaries in Montenegro. MANS requested the Constitutional Court to annul the rules for calculating the price, but no decision has been made yet.

From A2A they conditioned the management of EPCG with an increase in the price of electricity, so that is why they asked for changes to the contract for EPCG from September 2009, which was not signed.

RAE has increased the price of electricity twice this year, and the first jump occurred from January 1, and second this summer based on the new methodology, which plans a price grow until August 2015. Starting from that year, the prices for households will not be regulated by RAE, they will be formed in the market.

When asked whether they plan an exit strategy from EPCG in February the A2A responded that this would not happen, but “provided that they are guaranteed opportunities for industrial development of the company.”

“As it was confirmed in “Vijesti”on Monday, leaving Electric Power Industry of Montenegro is not foreseen in the business plans of A2A, which were recently passed at the Board of Directors and the Supervisory Board of the company,” Mariano said.

Prior to the introduction of new methodology there were speculations that A2A is planning to leave EPCG due to inability to bring back 400 million Euros they paid for the minority stake of shares. At that time there was no explicit denial from the company of possibility to withdraw, which could be interpreted as pressure on regulators to adopt decisions that will increase their income.

Large consumers will not have benefits like before

The A2A are satisfied how things are developing with the prices when it comes to the biggest industrial consumers, including the Podgorica Aluminum Plant (KAP) and Niksic Steelworks Toščelik.

“The answer of EPCG to issues related to electricity supply of large consumers is also going in the right direction: the price that they pay is below the production cost” said representatives of A2A and reminded that the industrial consumers will no longer have benefits from regulated tariffs starting from January when they will start paying the market price.

Source Serbia Energy Magazine