1/14/2008

United Energy gives in to MUS, signs coal price increase agreement

The increase in price was enforced by MUS, abusing its monopolistic position. United Energy insists that such a high coal price is unjustified and will keep calling on the state authorities to lower it. “Mostecká uhelná threatened us with cutting down coal deliveries. However, such reduction in coal deliveries would in practice result in a complete stop in heat deliveries, which is something we could not allow. So we had to accept the terms set by Mostecká uhelná and the much higher price in order to ensure heat deliveries for the residents of Most and Litvínov,” said Petr Jeník, CEO of United Energy.

If Mostecká uhelná fulfils its obligations under the new agreement, heat deliveries for Most and Litvínov will not be in danger this year. At the very end of the last year, MUS announced that it would only supply 300,000 tons of coal to the Komořany heating plant in 2008. However, such an amount is insufficient for heat generation. For reliable generation and heat supply, the Komořany heating plant needs approximately 700,000 tons of coal per year.

The situation was only resolved by a major concession made by United Energy, which accepted the 27% increase in the price of coal requested by MUS as a precondition for the delivery of a sufficient amount of coal. “We appreciate that Mostecká uhelná has stopped its previous threats of unconditional decrease in coal deliveries, which allows us to ensure reliable heat supplies for people and other customers,” said Jeník.

“However, we repeat that such a heavily increased price of coal is the consequence of the position of Mostecká uhelná in the market, not the result of a voluntary agreement between two parties. We remain convicted that such a high increase in the coal price is unjustified and illegitimate,” said Jeník. “We believe that state bodies will not countenance the situation. We are especially awaiting an intervention by the Office for the Protection of Competition, which has been investigating the case for more than a year without starting any proceedings in the matter,” he added.

Due to the increase in the coal price, United Energy is forced to raise the prices of heat for Most and Litvínov by 9.5 % in 2008. “It remains true, however, that we are ready to return part of the money paid for heat to our customers if the price of coal is reduced,” said Jeník.

United Energy operates a power source in Komořany with a total installed electrical capacity of 239 MWe and a thermal power of 974 MWt. It supplies heat to almost 35,000 flats in Most and Litvínov, as well as to industrial plants, schools, healthcare facilities, offices and institutions. United Energy, právní nástupce, a.s. is part of the consolidated whole of the J&T Group.

author: Martin Maňák - ředitel komunikace skupiny J&T pro oblast energetiky