Distributors tackle crisis

THE ENERGY dependence of Slovakia and its January gas crisis are challenges also for regional electrical power distribution companies. The global economic crisis is also affecting the electricity distributors, as their customers’ demand for power is dropping. The Slovak Spectator spoke to Ján Orlovský, spokesperson of the Západoslovenská Energetika (ZSE) and Boris Peško, the deputy spokesman of Východoslovenská Energetika (VSE) about the biggest challenges of the energy market. The third major regional distributor, Stredoslovenská Energetika (SSE), did not respond.

Distributors call for better cross-border connectionsDistributors call for better cross-border connections (Source: Sme – Vladimír Šimíček)

THE ENERGY dependence of Slovakia and its January gas crisis are challenges also for regional electrical power distribution companies. The global economic crisis is also affecting the electricity distributors, as their customers’ demand for power is dropping. The Slovak Spectator spoke to Ján Orlovský, spokesperson of the Západoslovenská Energetika (ZSE) and Boris Peško, the deputy spokesman of Východoslovenská Energetika (VSE) about the biggest challenges of the energy market. The third major regional distributor, Stredoslovenská Energetika (SSE), did not respond.

The Slovak Spectator (TSS): What are the biggest challenges of the energy market in Slovakia?
Ján Orlovský (JO): The greatest challenge seems to be finding the right model and approach to Slovakia’s energy dependence. The task will require very close cooperation by the state regulatory and other governing institutions with foreign investors and their subsidiaries in Slovakia. Major infrastructure projects in gas and electric cross-border, north-south transmission are on the drawing boards and have been the subject of various levels of political negotiations. The gas crisis in January has pushed the issue to the front lines and hopefully it will stay there until the results are palpable. In the electricity sector it is the utilisation of a new law approved by the government on the use of renewable energy and combined heat and electricity generation, further diversification of power generation and stability of the regulatory framework.
Boris Peško (BP): One of the most important spheres, which the market participants will have to manage in the near future, is the manner of regulation, especially due to the repeated introduction of regulation in some customer segments. Of course, currently, the economic crisis is a big challenge for many companies.

TSS: Has the gas crisis in January influenced the operating of your company? If it has, how - and what conclusions have you made regarding the further operation of your company?
JO: No, as an electricity distributor we did not record any extraordinary situations at that time.

BP: The gas crisis was mirrored immediately in the form of a decline of VSE revenues from customers which had to limit their consumption of electricity due to the regulations reducing gas supplies. This subsequently caused a worsening of the financial situation of some customers in relation to VSE as their power supplier.

This crisis has also pointed out the need for a long-term solution of the security of gas supplies in the sense of diversifying resources and interconnecting the distribution gas networks to neighbouring countries'. At the beginning of this year, our parent company RWE successfully participated in the operative solution of gas supplies for Slovak customers.

TSS: What impact will the global economic downturn have on the energy market in Slovakia and on your company?
JO: The decrease in economic output will result in reduced electricity consumption and that has been noticeable since January 2009. Power consumed by businesses represents about 75 percent of supplied electricity volume (the remaining 25 percent is household consumption) and thus our end-of-year results depend on overall economic development and recovery in Slovakia.

BP: From the viewpoint of the Slovak economy as a whole, a decline in power consumption can be expected and thus also a slight decline in the country’s dependence on electricity imported from abroad. In connection with the decline in consumption by some customers, VSE expects this to result in decreased revenues from the sale of electricity.

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