(Repeats story published late on Tuesday)
* CEZ trading chief sees pick-up in demand for power
* CEZ has hedged more than half of 2011 production capacity
* CEZ says regulation in region is crimping investment
By Michael Kahn and Jan Korselt
PRAGUE, Feb 2 (Reuters) - CEZ expects to boost production at
its power plants in 2010 and has pre-sold more than half of its
2011 electricity despite low wholesale prices, the company's
head of trading said on Tuesday.
Growing productivity at nuclear plants will help drive 2010
generation higher while a rebounding economy should help fuel
demand, which has picked up in the first quarter, CEZ's Alan
Svoboda told Reuters at an energy conference in Prague.
In the first nine months of 2009, CEZ saw its production
drop by 4.5 percent to 43.9 terawatt hours, although it
predicted minor growth of 0.6 percent for the full year.
"It is logical we see some growth in the first quarter
compared to a year ago because of the sharp drop off during the
economic crisis but the pick up in demand is also part of a
positive trend," Svoboda said.
"We expect to see accelerated growth at some point, then
stabilisation. We can't say when this will happen."
CEZ has also hedged more than half of its power sales for
2011 despite low prices because the company sees too much risk
in what Svoboda said would be a volatile market in the short
term driven by sentiment rather than fundamentals.
In October, CEZ said it was weighing whether to sell its
baseload electricity for 2011 because of low prices brought on
in part because of the economic crisis.
But Svoboda said CEZ in the end decided it was better to
reduce its exposure to the market by hedging a good portion of
its 2011 generation, he added.
"In general we are a risk adverse company," Svoboda said. "I
think what we will see on the forward market in the short term
is a lot of swings driven by traders rather than fundamentals."
In 2009, the utility pre-sold its power for about 61.5 euros
per megawatt hour. Svoboda did not say how much the company
received for its 2011 capacity, but market prices for baseload
electricity are now around 46 euros per megawatt hour.
CEZ, the region's dominant power trader, has boosted its
position with investments across Central Europe and the Balkans
in recent years. The company is the region's largest utility and
biggest listed company.
But Svoboda also told the conference that lagging energy
sector liberalisation in Central Europe and the Balkans was
crimping potential investment in new generation.
A difficult regulatory environment, low subsidized prices
and various fees distort the market and increase risk. A lack of
liquid spot markets to provide the proper price signals add to
the challenges, he said.
"Low distorted prices do not justify investment to new
generation capacity," he told the conference. "Forecasting
models are inaccurate for non-liquid markets."
"The only feasible solution for investors is to apply
conservative valuations with large risk premiums."
(Reporting by Michael Kahn and Jan Korselt, Editing by Sue
Thomas)
