Cabinet threatens regulator

THE CABINET has upped the stakes in its battle to have foreign-owned energy firms cut consumer prices, warning the independent market regulator on September 13 that if it doesn't make the cuts, the government will force it to do so.

THE CABINET has upped the stakes in its battle to have foreign-owned energy firms cut consumer prices, warning the independent market regulator on September 13 that if it doesn't make the cuts, the government will force it to do so.

"If the regulatory office takes a decision that is in conflict with the government's views and calculations, we will have to respect it. Then we will take legislative and other measures," said Prime Minister Robert Fico following a cabinet meeting.

An Economy Ministry document approved by the government the same day called for a 5.4 percent reduction in household electricity prices and 1.4 percent in gas prices, and highlighted the need "to change the members of the regulatory office".

In its ongoing confrontation with energy firms, which it has accused of gouging consumers with unnecessarily high margins, the Fico government appears to be following through on promises made before June elections to secure lower rates for natural gas, electricity and heating.

Some of its earlier proposals - to selectively tax firms that refused to make cuts, or to change the composition of the boards of energy firms to give the state management control - have apparently been dropped. Energy Minister Ľubomír Jahnátek said that the French and German ambassadors had visited him to express concern about the latter proposal, as many investors in Slovak energy firms are based in their countries.

"I told them very clearly that we didn't intend to do this [assert management control]," said Jahnátek. "This erroneous information comes from the media."

The head of the regulatory office said energy prices were in line with costs, but that if the cabinet was ready to fire office staff, it would probably get its way.

"It's not possible to achieve any significant reduction in end-prices for electricity and gas given developments in electricity production costs and world gas prices," said Karol Dvorák, head of the office in charge of approving consumer energy prices. "If the government changes the law, personnel issues will be in its hands."

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