Respekt: Trade minister's vision of Czech energy independence is dangerous

Prague, Feb 25 (CTK) - Czech Industry and Trade Minister Martin Kuba's vision of the Czech Republic as an independent island in the turbulent sea of European power industry is a dangerous game that may afflict common Czechs though Kuba asserts his plan will benefit them, Marek Svehla writes in the weekly Respekt.

Czech politicians feel alarmed by the threatening collapse of the Czech energy distributor CEZ's investment in Bulgaria, where crowds protest and the cabinet has fallen over excessive prices of electric energy, Svehla writes.

What do the serious problems of CEZ, the Czech Republic's key state company, mean for the Czech trade in electricity? Can the high prices raise public protests in the Czech Republic as well? These questions preoccupy Czech politicians, Svehla writes.

That is also why Kuba, when meeting his EU counterparts in Brussels, outlined the vision of the Czech energy independence, allegedly to the benefit of domestic consumers, Svehla writes.

At present, the Czech Republic exports more electric energy abroad than what its two-unit nuclear power plant in Temelin, south Bohemia, produces. This does not mean, however, that the Czech Republic is really independent. The Czech power grid is connected with the neighbouring ones, mainly the German, whose prices determine those set by Czech producers, Svehla writes.

If the Czech government wanted to push through energy independence, it would have to isolate the country in a way Poland has tried to do over its own dependence on its environment-unfriendly coal-fired power plants, Svehla says.

Prague's situation is different, however. The Czech Republic has modernised its power plants and it entered the European energy market. In view of the EU rules, a Czech U-turn and way to isolation would be uneasy and it would be disadvantageous for Czech electricity producers, Svehla writes.

Moreover, the idea that the more electricity the Czechs produce, the better off they will be is false, he continues.

In view of the prices of energy, it does not pay now to build power plans fired with traditional fuels (coal, gas, uranium), as the market has been preferentially flooded with giant amounts of green current mainly from Germany, Svehla writes.

It is far from sure that the energy prices will grow markedly in the years to come. First, the Germans continue to boost green energy vehemently. Second, the price of gas in the U.S. is falling as a result of shale gas mining. In Poland and other countries, they are starting to build terminals for liquefied gas (LPG), a new source of energy, Svehla writes.

Third, electricity production will get fragmented more and more with the development of smart technologies, and more and more companies and later also households will become independent producers or self-supporting units. Their disconnection from the grid would encourage others to follow the suit in face of the rising price of energy distribution, Svehla writes.

The development of the energy sector is difficult to anticipate, in view of the ongoing revolutionary changes, but drawing categorical conclusions may be counterproductive, Svehla continues.

In spite of this, the Czech government is going to do so. It is considering building a kind of taps along the border that would help the Czech Republic cut itself off from Germany. This is probably unfeasible. Even if it were not, by doing so the Czech Republic would mainly cut itself off from rival foreign producers without whom the local energy industry would become central-directed and very expensive, Svehla points out.

Another risk concerns Temelin. If the government ceased to respect the reality in the energy sector and if it insisted on the quick extension of Temelin to include another two units, it would have to promise guaranteed electricity prices from the extended Temelin to CEZ, Temelin's operator, Svehla writes.

Paradoxically, this may be a path towards what the government says it wants to avoid - high prices of electricity for consumers. No one knows now what the prices will be in the years to come and how many billions or tens of billions of crowns, the Czechs would have to pay to CEZ annually as a result of the government's promise, Svehla writes.

Kuba pretends seeking the consumers' welfare by proposing Czech energy independence, but the effect may be just the opposite, Svehla continues.

The extension of Temelin is disadvantageous for taxpayers but it may be very advantageous for people in positions deciding on the project. Temelin is not only a giant order worth hundreds of billions of crowns but also an extremely complex order.

Political pragmatists such as Kuba know well that the order will provide a number of opportunities to the firms controlled by their friends among businessmen. This opens the door for the pragmatists to gain money and more political influence, Svehla says.

From the point of view of Czech taxpayers and electricity consumers, Kuba's plan is a very dangerous trick. Outwardly the energy independence and Temelin's extension will be presented as beneficial to taxpayers, but in practice just the opposite will be true, Svehla concludes.

($1=19.341 crowns)