Hall: EPCG is a private, not a state-owned company

Electricity prices from April will depend on the income that energy companies are allowed to collect from consumers, and the Energy Regulatory Agency should announce today whether "new evidence from Elektroprivreda" will influence them to change yesterday's estimate that annual bills can be burdened with 220 million euros.

Elektroprivreda submitted a new assessment of the value of the company's assets from January 1 last year, with which they request that a higher rate of return on investments and depreciation expense be passed on to prices.

The RAE can reject it, if they stick to their rules according to which future prices are determined by comparing the required costs with those realized in 2009. Therefore, the value of the property until December 31 of that year, which they normally used in the quarterly analysis of EPCG costs, is also taken . And the regulator confirmed that it probably won't affect the change in income.

The RAE informed "Vijesti" that last night they interrupted the Board session where they were supposed to "behind closed doors" determine the final income by which the prices will be calculated by mid-March, due to the interpretation of the decision of the Constitutional Court.

"Based on the court's understanding that commercial losses, where there is energy theft, and high-tech in energy networks should not be paid by consumers, we reduced them to the unavoidable nine percent in distribution, excluding commercial ones. But the decision has arrived and it is ambiguous because can interpret that the inevitable technical ones should be kept, but also that they order that all losses be eliminated from the account," RAE unofficially explained.

In addition to the fact that the Italian representatives in the management of EPCG already perceive the company as "private", even though it is officially in majority state ownership, and the Italian A2A manages the executive management, they also assessed that the current RAE proposal leads to bankruptcy, losses and does not encourage new investments.

Bitter discussion of EPCG director with Kotri

Yesterday's eight-hour session, during which EPCG and Elektroprenos (CGES) last convinced the regulator to increase their revenues, was marked by a very heated discussion between the financial and executive director of EPCG, Masim Sala and Enrik Malerba, with the chairman of the RAE Board, Branko Kotri.

They were convinced about whether the new evidence about the total value of the property of around 850 million euros should be supported by additional documentation.

Elektroprivreda says that due to the significantly reduced costs of Distribution, it will not be possible to separate that unit from EPCG until the end of May 2012, which RAE rejected since the new prices cannot block the work, which had to be in the final phase at the old prices.

"How do you establish a new company if you are losing with the application of unfavorable prices, EPCG is not state-owned, so it should be helped if it is in losses. EPCG is a private, joint-stock company and it needs funds to establish a new one," said Sala.

The state has 55 percent of the share capital in EPCG, while A2A owns almost 44 percent and was given the opportunity, if it fulfills the conditions set by the Government and the most important thing is to make a profit of a total of 300 million euros, in 2015 to acquire shares until the majority ownership of the Montenegrin company .

Kotri begged them to lower their voices

While the Italian representatives harshly, with shouts and angry gestures, "taught" the regulator where they violated the EPCG and what evidence they must accept, Kotri calmly asked them to "lower the tone", saying that things are complicated, but not for "such a fuss".

Sala assessed that Kotri was abusing his position and that "there are the rights of RAE and the rights of Kotri", which the chairman of the Agency's Board refused.

"Trust me, I'm a good guy, I'm not going to give you a blank check".

Kotri asked if they had submitted complete documentation, and Sala replied that this is what RAE needs and that they submitted enough, saying:

"From now until five o'clock you will have a lot to do".

Sala assessed that Kotri was abusing his position and that "there are the rights of RAE and the rights of Kotri", which the chairman of the Agency's Board refused. After Kotri's question "why get excited", Sala replied:

"Because you consider me a liar, which is wrong".

At Kotri's request to drop the ball and continue the session without harsh words, Sala asked to treat EPCG with respect. He was warned that the RAE was determining whether any evidence that would increase EPCG's income was relevant, and shortly thereafter Sala asked for a "time-out" to call EPCG's lawyers for help.

Malerba understood that the regulator was accusing EPCG of submitting false data, and Kotri replied that it was not about damaging EPCG's credibility, but that they were asking to make a precise statement.

"You have no confidence in EPCG. You want to lead to bankruptcy in EPCG instead of creating conditions for new investments," said Malerba in "one breath".

The fact that Kotri intervened and asked EPCG on behalf of the consumer whether the valuation of the property included the part to which the auditor in 2009 expressed reservations about having proof of ownership further angered the Italian team, who said that it was all EPCG's property and that "makes up" questions.

"There was nervousness, because the request was not approved, which surprised the public and some state authorities," Kotri told reporters.

Interest rates and the fruit market

Sala reacted to the information from the expert service of the RAE that the company can borrow at an average interest rate of four percent, referring to "historical" data from EPCG's past operations.

Both EPCG and Elektroprenos are unhappy that a higher amount is not allowed for wages, complaining that RAE did not take into account the salaries of fixed-term employees, and complained that RAE demands XNUMX% payment.

Even the fact that under the "conductor's baton" RAE was allowed to charge consumers tens of millions of euros to cover high technical losses and those that contained "someone's" theft of electricity was not enough, because EPCG estimated that they should have approved 11 instead of nine percent of inevitable losses.

EPCG also disputes the increased rate of return, judging it to be unrealistic and referring to the opinion of the Central Bank that "the formula for its calculation is inappropriate, and its application is pretentious". They also submitted a letter from the management of Kombinat aluminum Podgorica as a confirmation that that factory only bought electricity from EPCG and that it did not import it in order to reduce EPCG's part of the income on that basis. The regulator claimed the opposite.

Both EPCG and Elektroprenos are unhappy that a higher amount is not allowed for wages, complaining that RAE did not take into account the salaries of fixed-term employees, and complained that RAE demands XNUMX% payment.

Elektroprenos (CGES) was criticized by RAE mostly because of unapproved costs from court cases.

When asked by Steve Muk from the non-governmental sector, how in 20 days they assessed that different rates correspond to "real conditions and the best practice in the region", the director of the Agency, Dragoljub Drašković, says that the rate was changed from 4,9 to 5,8 with "additional consideration". XNUMX percent.

Muk considers it illegal that RAE only returns the debt to consumers from 2009, and does not reduce the income based on corrections from 2010.

Three possible price jump variants

Although the RAE approved a lower income than last year and stopped electricity for households from rising by 79 percent according to the requirements of EPCG and Transmission, it does not mean that the price for households will remain the same or that their first projection that they will slightly increase it by three percent can be trusted.

If the price were to be increased by ten percent for households and lowered by 25 percent for companies, the price would be reduced to 8,2 cents.

They announced that they will equalize the price for consumers at the same voltage level. This means that RAE can "crash" the price to 7,6 cents per kilowatt-hour by lowering it by 30 percent for companies and raising it by three percent for households. It is more likely, as speculated, that the price of electricity for households will rise by about eight percent and for small businesses by about 27 percent, in order to reach eight cents.

If the price were to be increased by ten percent for households and lowered by 25 percent for companies, the price would be reduced to 8,2 cents. Since January 2010, the most numerous households with dual-tariff meters pay 7,39 cents per kilowatt-hour of electricity, those with single-tariff metering eight cents, while small and medium-sized enterprises pay around 10,9 cents.