Vladimír Urbánek (Kurzy.cz)
Czech markets  |  February 28, 2013 14:06:58

ČEZ approved the revised settlement agreement with the European Commission, which is committed to sell one of the plants Počerady, Chvaletice or together power and Tisová Mělník 3

The Board of Directors and the Supervisory Board of CEZ today approved a modified settlement agreement with the European Commission, which represents a major step towards completion of the investigation conducted by the Commission since 2009 to ČEZ. CEZ in June last year, the Commission offered to end this form of investigation, namely the obligation to sell any of the plants Počerady Chvaletice, Dětmarovice or Tisová with third Melnik In all cases, it is a plant, where CEZ plans to major reconstruction, but a gradual attenuation depending reached the end of technical lifetime of the device. The amended agreement no longer contains plant Dětmarovice. This agreement will come into force after approval by the European Commission.

ČEZ last June and immediately began the process of selling these plants and received offers to buy power Počerady, Chvaletice and Dětmarovice. At the same time the European Commission carried out a so-called "market test" of public comment procedure or to the conditions of the proposed agreement. Results of the market test confirmed the acceptability of this agreement for market participants. In recent months he had been discussions CEZ and the European Commission, which resulted in an agreement to limit liability only to the power of sale Počerady, Chvaletice or yew and Melnik 3 (ie plant Dětmarovice a group of plants, the sale makes the completion of the investigation excluded).The main reason for exclusion Detmarovice to ensure full comparability among variations commitments, especially in terms of fuel - coal.

Given the quality of bids received for the purchase of plants and due to the fact that CEZ is at an advanced stage of negotiations with Czech Coal long term supply of coal for power Počerady, CEZ considered most likely to fill the terms of the agreement with the European Commission Chvaletice selling power.

In the case plants Dětmarovice CEZ is considering selling based on offers received even when the transaction is not related to the termination of the investigation the European Commission.

Termination of management agreement in the field of European competition law norm. Commission would accept commitments offered under investigation body and terminates the entire proceeding, without examining further and determine whether the company is truly committed something illegal. Settlement of the Commission's perspective leads to a sufficient increase competition in the market so there is no need to continue the investigation.

All proceedings in competition law initiated by the Commission in the last 10 years that involved energy companies (such as RWE, E.ON, Gaz de France and ENI), was sooner or later ended this way. Settlement does not mean that the company violated competition law. Companies usually choose this solution if the commitments, the Commission accepts as sufficient, is not inconsistent with long-term strategy of the company, they do not damage their economic interests and in doing so to avoid further costly process that could drag for years.

Development of investigation

The Commission carried out at ČEZ, as and its subsidiaries Severočeské Mines, Inc., in November 2009 an unannounced visit. In the former expression, the Commission stated that the alleged anticompetitive conduct could have intended to exclude actual or potential competitors in the wholesale electricity market and raise prices in the wholesale electricity market in the country.

ČEZ series presenting evidence refuted all substantive allegations of the Commission.

The Commission then decided to investigate further in the proceedings, which began in July 2011, only a suspicion of alleged blocking of transmission capacity in a node Výškov the construction of a combined cycle power plant Počerady, because of which apparently had not to get the required capacity of coal-fired power plant construction project of MUS. Suspicion is unfounded in terms of ČEZ, as when booking capacities always acted in accordance with applicable law and this project was duly approved as a cost-effective and strategically important and it is now nearly finished.

Terms of settlement and next steps ČEZ

Terms of settlement to satisfy both parties. Sales of some plants is in line with the strategy ČEZ operate in the future only modernized coal and at the same time as the European Commission's view on desirable to increase competition in the market.

The previously adopted strategy development of its portfolio of manufacturing resources is substantially CEZ decided to invest in the Czech Republic only in the reconstruction of the pelvic plants for which CEZ has secured coal from its own resources and therefore no risk of commercial disputes coal supply. It is a plant in Ledvice, Tušimice and Prunéřov in which CEZ invested so as to meet all environmental standards (to significantly improve their efficiency and reduce CO2 emissions compared to the state) and that are able to operate for many decades.

The remaining coal-fired power plants, CEZ operates in accordance with all legislative standards, but does not plan to invest comparatively large resources that would bring major changes to their technological characteristics or life. These sources planned CEZ gradually diminish depending on the availability of coal, the size of the investment required to meet future emissions constraints on the current market situation and the alternative possibilities to ensure the supply of heat, where they are connected to the power CEZ CPM systems. Power of this group have in the portfolio of these reasons ČEZ limited strategic value. For other market participants, but these resources can have much greater significance - it is a properly maintained facilities that are generally capable of operating another 10-15 years and are in attractive locations with all the infrastructure neededfor the operation of power plants on coal or other fuels (gas, biomass). This is true of assets that allow market participants to immediately (ie, without the time consuming process of planning, approval and construction required for new source) to obtain a position in the production of electricity and also provide a variety of opportunities to develop the site in the future.

Ladislav Kriz, CEZ spokesman

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ČEZ schválil upravenou dohodu o narovnání s Evropskou komisí, kterou se zavazuje prodat jednu z elektráren Počerady, Chvaletice nebo společně elektrárny Tisová a Mělník 3

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