Czech energy regulatory proposal riles foreign investors
Source:Reuters Published: 2013-3-26 23:18:01
The Czech energy regulator has angered energy investors with a proposal to shorten the current regulatory period for gas companies by a year, moving to toughen rules to limit what it says have been excessive profits.
Gas transit and distribution companies have artificially boosted profits by about 5 billion Czech crowns ($249.98 million) since 2010, regulator ERU said last week.
The regulator believes gas companies overstated the book value of investments to qualify for higher regulated earnings.
In response, the ERU wants to end the current framework this year instead of next.
"Early termination of the regulatory period is seen by the office as desirable and necessary," the regulator said in a statement.
Two foreign investors criticized the proposal.
Martin Herrmann, head of RWE's Czech unit, told a conference the move was "not acceptable," saying, "We think the regulator is playing with the credibility of the system."
E.ON Senior Vice President Robert Hienz said, "This is not the way to increase mutual trust between industry and their other partners."
The Czech regulator has given gas market participants until Thursday to respond to the proposed changes and discussions are scheduled to start on April 5. It expects the new regulation to be approved by the end of July.