Czech energy regulator takes parting shot as changes loom

The unmistakable and controversial head of the Czech energy regulatory office (ERÚ), Alena Vitásková has taken what could well be a last parting shot at one of her main opponents of the last few years, the Ministry and Industry and Trade and its current head, minister Jan Mládek.

Alena Vitásková, photo: Filip JandourekAlena Vitásková, photo: Filip Jandourek Vitásková announced that her office will no longer be making preparing for the regulatory framework in the gas and electricity sector from January 2019. Looking at the fact that her own mandate will come to an end on August 1 and the fact that a new chairperson and new council to supervise the operation of the office will take over afterwards, Vitásková basically said it wasn’t worth the effort.

More damagingly though, she added that the new board will be a political tool of the industry ministry with a deputy minister in charges. And, according to her big players in the electricity and gas sectors have already been told unofficially to wait to make their submissions on how the sector should be regulated until the new team is in place and Vitásková long gone. The motivation for setting out the new sector rules could clearly be political or something else and she said she did not want anything to do with that, she added.

The energy regulator was created at the behest of the European Commission under rules expected to create a level playing field and curb government intervention in energy prices and markets, which are often very political issues indeed.

And with a government report highlighting the large dividend outflows abroad from the Czech energy sector and low investment in energy networks over recent years, it looks like the energy sector will be under focus again as the energy tries to set charges which correspond to past investment, planned investment, and a slim profit margin.

Vitásková has also taken the trouble to warn Prime Minister Bohuslav Sobotka of a looming time bomb in the form of a needed shake-up of electricity distribution charges. The overall argument is that with more and more electricity consumers opting for their own renewables production and out of the main network, the charges need to be rebalanced.

A warning over that sort of rebalancing act has just come out of Slovakia. There the regulator pushed through a new framework which caused sharp price rises. The government woke up to the implications when bills began to go out in the second week of January. It eventually negotiated a back to the 2016 status quo. The regulator, still ostensibly independent and protesting innocence, offered his resignation. A new head of the regulatory office needs to be appointed with many posing questions about what his or her independence will really be.