* CEZ sees signs of power demand recovery
* Waiting on whether to pre-sell 2011 power
* Sees increased nuclear production in 2010
(Adds details, quotes)
By Jan Korselt and Michael Kahn
PRAGUE, Oct 21 (Reuters) - Demand for electricity generated
by Czech power group CEZ <> has slightly risen in
recent months in a sign the market may be on the mend, head of
sales and trading Alan Svoboda told Reuters on Wednesday.
The utility, which has presold 90 percent of its 2010
baseload electricity at prices comparable to a year ago, is also
weighing whether to hold off on selling 2011 baseload
electricity until prices rise, he added.
"After a sharp drop in January and February there has not
been any substantial further fall in demand," Svoboda said in an
interview at CEZ's headquarters in Prague. "From what we can see
over the past months, it has been slightly increasing."
"We can see a positive trend, but we will have to wait until
the peak season (in the winter) to say for sure."
CEZ, Europe's seventh-biggest utility both by market
capitalisation and number of customers, is the region's dominant
power trader and has boosted its position with investments
across central Europe in recent years. The power it generates is
sold across the region.
POWER PLANTS
In 2008, CEZ generated 60.4 terawatt hours of electricity,
mostly at its coal-fired and nuclear power plants. For 2009, the
company had estimated its output at 63.5 terawatt hours but
Svoboda said the utility would not hit that mark because it
bought surplus capacity more cheaply on the market.
This means CEZ, which relies heavily on high-polluting
coal-fired power plants, was able to save emission allowances to
help cover its future needs, he said.
"The first good news is that we had higher forward sales
with a plan to increase production," Svoboda said. "The second
bit of good news is that when spot prices on the market fell we
could save money by buying on the market."
Svoboda also predicted cheaper coal, higher nuclear
production and its hedging of baseload capacity would be the
main drivers of the company's performance in 2010.
In 2009, CEZ pre-sold production for about 61.5 euros per
megawatt hour. Svoboda declined to detail the prices for 2010
but analysts have estimated that figure at around 57 euros per
megawatt hour.
The main question going forward, he added, is whether to
sell 2011 baseload electricity now when prices are low or to
wait.
"Most of the baseload power for 2010 has been closed at a
level comparable to results for this year," Svoboda said. "For
us, the year 2011 is more interesting."
"The dilemma we are trying to solve now is whether we should
wait for a moment when electricity prices will be influenced by
a change in the gas market, or reduce the risk and sell for
lower prices."
A more stable electricity market since the beginning of the
year with no surprises means CEZ can also stick with its 2009
financial forecasts issued in February, Svoboda added.
That outlook called for a 6 percent rise in net profit,
before minority shares are deducted, to 50.2 billion crowns, and
earnings before interest, tax, depreciation and amortisation
(EBITDA) to rise by 2 percent.
"Since February the situation has not deteriorated
dramatically," Svoboda said. "So there is no markedly bad news
that would reverse that."
(Editing by Jan Lopatka and Sue Thomas)
