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State moves to cap energy prices

THE SLOVAK government moved towards greater state regulation of energy prices as part of its widely-heralded 'get tough' approach to energy monopolies. Prime Minister Robert Fico said the move has historical importance, and could lead to a revolution in the energy sector. But observers doubt that state regulation is the right way to tackle rising energy prices.

THE SLOVAK government moved towards greater state regulation of energy prices as part of its widely-heralded 'get tough' approach to energy monopolies.
Prime Minister Robert Fico said the move has historical importance, and could lead to a revolution in the energy sector. But observers doubt that state regulation is the right way to tackle rising energy prices.

The Slovak Cabinet’s July 2 decision will hand the Regulatory Office for Network Industries (ÚRSO) more authority to cap prices in the energy market.

"I have a feeling that energy monopolies are sometimes fooling us,” the prime minister said, according to the SITA newswire .

Fico said he sees regulation of energy prices as a way to change the present situation, in which low-income households in Slovakia are having to spend a higher share of their income on energy than anywhere in the European Union.

Prices would be capped from 2009 until the share of expenditure on energy in household incomes reaches the average for EU member states, Fico said.

The regulation will first of all protect the lowest income groups, said Economy Minister Ľubomír Jahnátek who is now responsible for coming up with a set of rules and caps for the sector.

Gas suppliers will only be able to charge regulated prices to households whose annual consumption does not exceed 6,500 cubic metres, the cabinet said in its official report.

Electricity producers will have to supply at least 6 TWh of electricity at a price set by the regulatory authority to households without electric heating with annual consumption up to 5,000 kWh; to households with electric heating that consume up to 20,000 kWh per year; and to small companies with an annual consumption of up to 30,000 kWh, according to government information.

If it pursues the legislation, the state will restrict the freedom of action of private entities, and should provide some compensation for their owners' losses as a result of having to sell products at a lower price, Juraj Kopřiva, spokesman for Slovenské Elektrárne, told The Slovak Spectator.

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