POWER ABUSE - CANDOLE RESEARCH
In an earlier study, ČEZ Unplugged (March 2010), we explained reasons for ČEZ’s profitability, which is unmatched by its peers with comparable fuel mix. We concluded that these abnormally high profit margins can be attributed to exogenous factors quite independent of the quality of the firm’s management. The most important of these is the fact that ČEZ is able to sell its output at German prices, while enjoying the Czech cost base. German electricity price is relatively high because German producers will have to bear the full cost of carbon from 2013; the fact that environmental charges are much higher in Germany than in the Czech Republic; the relatively high share of gas in the German fuel mix; and the German decision not to continue its nuclear program. ČEZ’s exposure to these risks is marginal.
