Slovak government and utility companies steamed up over energy prices

In Slovakia, the government and the utility companies are steamed up over energy prices. The government promised to lower fuel and energy prices by 5 percent but some companies have just submitted tariff proposals that put the price up by an average of 15 percent as of October. Prime Minister Robert Fico is displeased and has made statements which appear to threaten the independence of the energy market regulator - a body which by law has the final say in setting energy prices. Anca Dragu reports from Bratislava:

The Prime Minister, Robert Fico, thinks that Slovaks pay too much for the fuel and energy they consume and the reasons why this happens are obvious to him:

"This government will try to strengthen its position in the boards of the utility companies which have a dominant position on the Slovak market and make huge profits from the tariffs they impose on ordinary people. The state is the majority shareholder but the profits go to foreign companies because their managers control the boards," said Fico.

Big multinational energy companies such as E.ON, ENEL, Gaz de France, Ruhrgas have bought stakes in Slovak utility companies. They argue that they have to respect the evolution of prices on the international energy markets. The Slovak natural gas utility SPP, for example, announced it will increase gas prices by 15 percent as of October because it is forced to buy more expensive gas from its Russian supplier. Slovakia is dependent on oil and gas from Russia. Others like the regional distributor Zapadoslovenska energetika blame the dominant position of the power producer Slovak Electric for the 13.5 percent hike in the price of electricity it delivers to western Slovakia. All of them avoid commenting on the potential political interference in their operations.

"ENEl and Slovak Electric support the government for keeping the electricity prices stable and we are currently working on the feasibility study for another unit at Mochovce [nuclear power plant]. So we want to contribute to Slovak energy security."

...says Rastislav Petrech, the spokesperson for the dominant power producer Slovak Electric. Prime Minister Robert Fico is not the only one complaining about high tariffs. The EU Energy Commissioner Andris Piebalgs also thinks that electric energy prices for households in Slovakia are one of the highest in the EU. But he holds back from attacking the shareholders of the utility companies:

Photo: archive of ČRo 7 - Radio Prague
"What is necessary is that there are fair regulated taxes for the access to the network and there are competitors in the market. This is crucial. Who is the owner is not the most important issue. There is a clear tendency that the government takes less and gives more possibility for private capital because you can attract more capital for the investment in the production capacity."

The European Commission required Slovakia to set up the Office for Regulation of Energy Networks as a precondition for accepting the country into the EU. It should make decisions independently of the government and has to observe Slovak and EU laws and regulations. That means that it cannot force SPP for example to sell gas for prices that are lower than its production costs because it will break the EU rules. But the cabinet of Prime Minister Robert Fico wants to put pressure on the regulatory authority to prevent autumn's rise of gas prices for Slovak households. Fico even said that the regulatory office has to work in the best interest of Slovak citizens. Despite the fact that he respects its independency, his cabinet could submit an amendment to Parliament that would give the government more control over the regulatory office.

"We function according to the laws of the Slovak Republic so if the government plans to change them, what can we do, we will have to obey the new legislation. The government says that it wants lower energy and fuel prices but that is exactly our goal too. However, we have to apply some economic reasoning to our decisions and activity. The main problem of the Slovak consumers is the low purchasing power and our office cannot help with that," concluded Miroslav Luptak a spokesperson for the regulatory office.

As for end users, some have already given up following the debate and decided they would rather move to more energy friendly buildings.