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Generation, Technology, Organization

In 2010–2011, CEZ Group offered end customers in the Czech Republic the following commodities and related services:

Customers can order electricity and natural gas directly, in the form of supplies of the actual commodity (Electricity or Natural Gas Supply Contract), in which case the customer obtains distribution service through a separate Distribution Service Supply Contract. Much more frequently, however, they do business with us through an Integrated Supply Contract for the commodity in question, under which ČEZ Prodej provides the customer not only with supplies of the commodity, but also arranges for provision of distribution services by the relevant local distributor in accordance with applicable legislation.

Location of CEZ Group Power Sources in the Czech Republic

Electricity

Despite ongoing market liberalization, CEZ Group is still the biggest supplier of electricity to end customers in the Czech Republic. We offer our existing and potential new customers in all market segments innovative products and services, and adapt them to the customer’s needs in justified cases. This enabled us to defend our leading position in all three basic segments – large endcustomers, retail-commercial, and retailresidential – in 2011. As increased competitive pressure in the electricity market has expanded into the retail-commercial and retailresidential segments, CEZ Group’s market share in these segments declined despite the above-average success rate of our customer retention initiatives in 2011.

In 2011, CEZ Group power plants in the Czech Republic generated a total of 63,321 GWh of electricity, up 57 GWh from 2010. In 2010, CEZ Group power plants in the Czech Republic generated a total of 63,264 GWh of electricity, up 2,422 GWh from 2009.

At December 31, 2011, CEZ Group companies in the Czech Republic owned generation installations with aggregate installed capacity of 12,813.6 MW, up 85.7 MW from year-end 2010. The most significant changes included a 70 MW increase in the installed capacity of Unit 1 of Dukovany Nuclear Power Station following a turbine rebuild, the obtaining of 11.1 MW of installed capacity in cogeneration units within the company ČEZ Energo, the commissioning of a new turbine with 4.1 MW of installed capacity in Dvůr Králové nad Labem, and the commissioning of the Číčov biogas station belonging to the company Bioplyn technologie with 0.526 MW of installed capacity.

Natural Gas

In 2011, CEZ Group became the biggest alternative supplier of natural gas in the Czech Republic in terms of the number of customers acquired. The chosen strategy in the residential segment, resulting in over 174,000 new customers acquired in 2011, followed the Group’s successful entry into the natural gas market in the corporate customers segment in past years. Thus, CEZ Group now supplies natural gas to customers in all market segments – large end-customers, mediumsized end-customers, small end-customers, and residential customers.

Heat Generation

CEZ Group heat generation sources in the Czech Republic supplied a total of 10,422 TJ in 2011. In terms of the year-on-year comparison, this represents a 731 TJ (–7%) decline in supplies. Compared to 2010, the only addition to the production portfolio was ČEZ Energo, which generates heat in smallscale gas-fired cogeneration units.

Distribution

In the Czech Republic, the CEZ Group company that distributes electricity is ČEZ Distribuce, which arranged for 32,613 GWh of electricity to be supplied to customers in 2011. The year-on-year decrease of 324 GWh was caused, in particular, by lower demand for electricity associated with weather conditions. In terms of voltage levels, the decrease took place mainly in the low-voltage segment (down 736 GWh). At the medium and high voltage levels, on the other hand, distribution volume grew – by 324 GWh and 88 GWh, respectively.

International

CEZ Group focuses in particular on markets in Central and Southeastern Europe. Primarily, it concentrates on countries in which it already operates in some form, and where it can apply its rich experience in managing an electricity conglomerate at a time of a newly liberalized power market and pass on its know-how. Another important aspect of CEZ Group’s international operations is renewable sources of energy – in locations where the natural conditions are amenable to this purpose. CEZ Group is one of the ten biggest energy corporations in Europe.

2011 was the Group’s most successful year yet in terms of its international acquisitions. The aggregate EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of the international acquisitions reached nearly CZK 11 billion, which is CZK 2 billion higher than the 2010 result which itself was the highest at the time. So far, the results of ČEZ’s international acquisitions have generated nearly 80% of the amount invested in them.

At year end 2011, CEZ Group included 76 international companies with nearly 14,000 employees in eight countries of Central Europe, Southeastern Europe, and Turkey. These companies now contribute CZK 67 billion to CEZ Group’s revenues and account for one quarter of the Group’s fixed assets.

In addition to the Czech Republic, there are CEZ Group companies with direct energy sector operations in Albania, Bulgaria, Hungary, the Netherlands, Poland, Romania, Slovakia, Serbia, and Turkey. In Albania, CEZ Group operates the country’s sole distribution company. In Bulgaria, it distributes and sells electricity in the western part of the country and generates power in its own coal-fired power plant near Varna, the Black Sea port city. In Poland, two black coal-fired power plants near the country’s border with the Czech Republic are part of CEZ Group, as is a company that is preparing to build wind power plants. In Romania, CEZ Group is involved in the generation of electricity from renewable sources through the operation of the Fântânele and Cogealac wind farms and the Reşiţa hydro power system, in addition to electricity distribution operations. In Turkey, CEZ Group and its local partner operate a distribution company and generate electricity in gas, hydro, and wind power plants. In the remaining countries, the companies carry on wholesale operations in electricity, other commodities, and related derivatives, function as holding companies, or engage in financing activities. Throughout Central and Southeastern Europe, CEZ Group engages in wholesale trading in electricity and natural gas.

CEZ Group is one of Europe’s top ten power companies

Top 10 Power Companies in Europe (number of customers 2010, millions)
Top 10 Power Companies in Europe (market capitalization in EUR billions, as at May 17, 2011)

Anniversaries of CEZ Group Power Plants

Several CEZ Group power plants celebrated anniversaries in 2010.

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