The cost of CEZ-generated electricity supplied to households will decrease by at least 5 %

CEZ Power Company, following its merger with regional distribution companies, will let the households benefit from the Rainbow Electricity, which has so far been supplied only to the distribution companies. This should happen within a very short time span. The Rainbow Electricity scheme will reduce the prices of electricity supplied to households at least by 5 %.

The reduced prices cannot be introduced until the Czech Economic Competition Protection Authority has approved the merger between CEZ and the regional distribution companies.

CEZ will be able to make the lower prices beneficial for households that draw electricity from distribution companies STE Central Bohemian Distribution Company, ZCE (West Bohemian Distribution Company), SME (Central Moravian Distribution Company), VCE (East Bohemian Distribution Company) and SCE (Central Bohemian Distribution Company). The shareholders of these companies appointed CEZ as the majority owner, which will enable the company to ensure lower costs of supplied electricity and consequently also lower prices of electricity for households. A certain potential for price reductions has also been established in the remaining three companies (PRE Prague Distribution Company, JME - South Moravian Distribution Company, JCE - South Bohemian Distribution Company), which CEZ supplies with Rainbow Electricity for prices identical with the cost of electricity supplied to other distribution companies. However, CEZ is unable to exercise any direct influence on the price for end consumers, because it will only acquire a minority equity share in the PRE, JCE and JME companies.

A merger with the distributors will finally enable CEZ to influence the end price and ensure that effective production of Rainbow Electricity will reduce household electricity bills, said Mr Jaroslav Mil, the Chairman of the CEZ Board of Directors and the company CEO. A price reduction of electricity supplied to households has already been fully substantiated by this year's Rainbow Electricity offer, and if this potential is not fully used by the regulator, it will by used by CEZ, added Mr Mil.

CEZ has kept the price level of its electricity supply constant over the past 10 years. Compared to the last year, CEZ lowered the prices of its power electricity, offered in the Rainbow Electricity package, by 5%. However, this had no effect on the end consumer the price of electricity supplied to households was constantly increasing.The price reduction will be brought about by synergic effects resulting from the impact of a single power group that combines both production and distribution. The savings will arise from a transparent purchase policy distribution companies will provide their customers with electricity for the lowest available cost.

CEZ is currently launching its new product range offered in the Rainbow Electricity package for the year 2003.

Rainbow Electricity package for 2003 comprises a total of 14 products, i.e. three more products than in 2002. The advantage of the 2003 Rainbow Electricity scheme is the fact that it has a more flexible structure, which enables the consumers to optimise their demand. A novelty in the package is the offer of options that enable the reservation of certain products. The 2003 Rainbow Electricity package is offered as a complete series, without any quantity-related restrictions in the supply of certain products; this means that, unlike last year, customers have the opportunity to maximise the purchased bulk of the cheapest yellow electricity. Customers will be allowed to choose from all the Rainbow Electricity products already in the first round.

The current offer from CEZ comprises both maximum and orientation prices. The final price will be shaped by the demand of our customers. A transparent purchase policy on the part of our principal customers, the distribution companies, would increase drawn-off bulk of the cheapest product in the Rainbow Electricity package, which would consequently reduce the overall volume of supplied electricity in comparison with this year. If the cheap electricity is not purchased by domestic customers, it will be offered to foreign entities, and there will be no opportunity to buy this cost-effective electricity back in the case of any potential electricity shortage that might take place in the future.

Ladislav Kriz,CEZ Press Officer

2. 9. 2002