Electricity for some businessmen in Serbia is 55 percent more expensive

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General Manager of the company “Dunav” Grocka, Petar Stojanovic has been amazed since he received a letter from “Elektroprivreda Srbije – Snabdevanje” on June 11, informing him that electricity for consumers in the economy will increase by 55% and that there was no announcement before that.

– We received an offer from “EPS Snabdevanje” for a complete supply of electricity for the period from July 1, 2021 to June 30, 2022. The price for the higher tariff is 82.57 euros for one megawatt-hour (so far the price was 53.44 euros), which is an increase of 54.51 percent. At the same time, the price of 52.34 euros for one megawatt-hour was given for the lower tariff (the previous one was 33.88 euros), which is an increase of 54.49 percent. Such a drastic increase in the price of electricity is not only unacceptable for us but also poses a serious threat to the further work and survival of the company “Dunav” Grocka, given that we are a company that is one of the predominant exporters, and that we have a fixed euro exchange dinar rate, so that makes our situation hopeless – says the first man of the company “Dunav” for “Politika”.

Given that the Serbian Chamber of Commerce should protect the interests of industry, in accordance with its competencies, we ask them to take all measures to launch an initiative with the Ministry of Economy and this trend of drastic increase in electricity prices, in conditions of no inflation, stopped and ensured the survival of many factories that are in the same or similar situation as “Dubav”, says Stojanovic.

Asked what is the reason for such a large increase, EPS told “Politika” that electricity is a market commodity and the current price is a consequence of price movements on electricity exchanges, which have reached record levels. The realized spot prices of electricity in 2021 from January 1 to June 15 on the HUPX stock exchange in Hungary, as the reference stock exchange for our region, were the highest in this period of the year, since this stock exchange started operating in 2010. In this period, prices are the highest ever on the stock exchanges in Serbia, Slovenia and Croatia, although they started working later in relation to the HUPX stock exchange.

Regarding prices on the commercial market, the reference price of electricity on the wholesale market in Serbia for end customers for the period July 2020 – June 2021 was at the level of 46 euros per megawatt-hour for basic delivery, 52 euros per megawatt-hour higher tariff, 34 euros per megawatt-hour lower tariff. The fall in prices compared to the previous year is a consequence of the Covid 19 pandemic.

In June 2021, the reference price of electricity on the wholesale market in Serbia for end customers July 2021 – June 2022 is at the level of 77 euros per megawatt-hour for basic delivery (87 euros per megawatt-hour higher tariff, 56 euros per megawatt-hour lower tariff).

The final price for end customers in Serbia depends on the moment of submitting the offer, the type of customer, ie its annual consumption and the customer’s consumption profile by months. In the case of “Dunav” Grocka in 2019 agreed on prices of 62.25 euros per megawatt-hour for a higher tariff and 39.46 euros per megawatt-hour for a lower tariff, while in 2020 it agreed on a price of 53.44 euros per megawatt-hour for a higher tariff and 33.88 euros per megawatt-hour for a lower tariff, they point out in EPS.

In accordance with the Law on Energy, all electricity customers except households and small customers have the obligation to procure electricity on the market and supply is performed on the basis of a supply contract, which is concluded mainly for one year.

During the duration of the contract, the price is unchanged, and at the time of contracting it depends on the current market conditions, so that the buyer can face both lower and higher prices compared to the previous contract. The current increase affects the price for customers who now contract the purchase of electricity.

Market trends and price fluctuations apply to all market participants and even to other suppliers, so that EPS remains competitive even in these conditions. EPS guarantees the invariability of prices for signed contracts, so that despite the changes in the market, large consumers have security of supply and prices in the agreed period and do not change EPS for another supplier.

Higher prices on the stock exchanges also affect the offers of other suppliers, not only EPS. The largest number of customers who occasionally change suppliers are small commercial customers who have low annual consumption and do not have a significant impact on the business of EPS.

The price of carbon dioxide emissions is the biggest culprit

The biggest reason for the increase in electricity prices in Europe, both on the spot markets and on the futures markets, is primarily the increase in the prices of carbon dioxide emissions to the historical maximum during this year. The current price is at the level of 52-53 euros per ton (the maximum was above 56 euros). For comparison, the average price of carbon dioxide emissions in 2019/20 year was about 25 euros per ton, and during March 2020 the price was about 17 euros per ton, Politika reports.