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MANAGEMENT SAYS RISE ON SMALL CONSUMERS NEEDED TO KEEP FIRM FROM NET LOSS IN 1997

SE submits proposal for 50 percent energy price hike

Slovenské Elektrárne (SE), looking at projected zero profits for this year and a net loss for 1997, has proposed jacking up the price of electricity 50 percent for small consumers who the company's leaders say are paying far below market prices for power. But this state-owned utility's spunky bid one year before national elections most likely will receive less than full approval from the Slovak government.
Responding to SE's proposal on April 15, Economic Minister Karol Česnek, who until last fall was SE's general director, told the Slovak press, "The proposal to increase the price of electricity by 50 percent for citizens and 10 percent for large corporate customers is maximal, and the actual increase could be half of it. However, when and how much the prices will go up has not been decided. The government prefers a model of gradual steps."


"We have to secure a profit, because next year will be crucial for us. This year our costs and profits are almost equal, but if demand keeps growing, next year we could produce a loss."

Tibor Mikuš, General Director, Slovenské Elektrárne


Slovenské Elektrárne (SE), looking at projected zero profits for this year and a net loss for 1997, has proposed jacking up the price of electricity 50 percent for small consumers who the company's leaders say are paying far below market prices for power. But this state-owned utility's spunky bid one year before national elections most likely will receive less than full approval from the Slovak government.

Responding to SE's proposal on April 15, Economic Minister Karol Česnek, who until last fall was SE's general director, told the Slovak press, "The proposal to increase the price of electricity by 50 percent for citizens and 10 percent for large corporate customers is maximal, and the actual increase could be half of it. However, when and how much the prices will go up has not been decided. The government prefers a model of gradual steps."

SE claims the prices must rise to offset the cost of servicing both sectors, and have pointed to the fact that last year the company could not supply 12 percent of the country's energy needs, and thus outsourced for foreign juice to make up for the deficit in domestic power.

While admitting that the company-proposed price hike may be more than the government will approve, Tibor Mikuš, SE's general director, said that to ensure safe and reliable service in the future, the company has to up rates to keep pace with rising costs next year and beyond. "We have to secure a profit," Mikuš said, "because next year may be crucial for us. This year our costs and profits are almost equal, but if demand keeps growing, next year we could produce a loss."

Mikuš pointed out that currently, small consumers are paying only about 80 percent of what it costs SE to produce electricity. "It isn't possible to sell energy more cheaply than you produce it," he said. He added if electricity prices remained the same, SE would have to import 17 percent of Slovakia's energy in 1997.

He added that small consumers can no longer realistically expect Europe's second-lowest electricity prices after those of Albania.

"We can say that the gross domestic product is increasing by about 6 percent per year," Mikuš said. "The consumption rise among big customers reflects this increase, but individuals' consumption is much higher. Ten years ago, there was only one refrigerator in each family, maybe one TV and one radio, but now there are two or three refrigerators and two TVs, [let alone] air-conditioning, which wasn't known here ten years ago."

Energy source debate

But Slovak environmentalists are furious at what they see as SE's attempt to finance the cost of upgrading the Soviet-era nuclear power plant in Jaslovské Bohunice from the pockets of the company's smallest customers, arguing that investment in cheap renewable alternatives would make any such move unnecessary.

"We think this nuclear investment is the biggest single reason for the [proposed] rise in electricity prices," said Ľubica Trubíniová, the Slovak director of the international environmental organization Greenpeace. "Slovakia's tragedy is the strength of its economic and political lobbies. By reconstructing Bohunice and completing [another nuclear plant at] Mochovce, [they are] blocking investment in cheaper, more efficient technologies, such as gas and steam combustion. These alternatives cost much less and are environmentally friendly and safe."

Mikuš said the perception of nuclear energy as costly, environmentally harmful and unsafe is unfounded, while the limited potential for renewable resources makes nuclear power the cheapest, safest, and cleanest option.

"Nuclear energy is for us the only resource which allows us to protect the environment," Mikuš, who has 20 years' experience in the nuclear power field, said, "because emissions from nuclear plants are a hundred thousand times below allowable limits. If you produce this energy from fossils, you would pollute the environment with many millions of tons of emissions. It would be very interesting for us to use environmentally friendly resources, and we do - [by using] nuclear."

Last year, Slovakia's only nuclear plant in Jaslovské Bohunice generated 50 percent of the country's electricity needs, Mikuš said. SE has come up with a proposal to upgrade it at a cost of 5.5 billion Sk, the same amount it would cost import what the plant produces annually if it were shut down, as Slovak and Western environmental NGOs have repeatedly demanded.

Pointing out that Slovakia doesn't have many energy alternatives, Mikuš said SE has an equation that optimizes the different costs associated with the country's energy resources: "In Slovakia, we have three main resources for power generation: hydropower, fossil fuels, and nuclear."

"We have 2,300 megawatts of hydropower, 1,760 megawatts of nuclear, and 2,150 of installed fossil capacity," Mikuš continued. "While from nuclear we produce 50 percent of our production, we get about 20 percent of our energy from hydropower, and the rest from fossil. But it would take 30 hydroelectric power plants to provide the energy in one unit of one nuclear power plant."

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