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26 January 2012

ČIA: Growing competition among energy providers

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The dynamics of energy provider changes in the Czech Republic was faster in the year 2011, too, both in the case of natural gas and electricity. According to PwC Audit partner Tomáš Bašta, it will still take some time before the number of changes stabilises at some level, which, however, can still be significantly higher than in 2011. It appears from an OTE statistic that last year, 448,860 customers switched their electricity providers, an increase of 80% compared with 2010. The number of changes in the case of companies that decided to switch a provider grew by about one third to 11,232 in the category of wholesale customers and to 62,683 in the small-volume customer category. Last year, a total of 361,941 entities changed their natural gas provider, up four times year on year. According to the data from the Energy Regulatory Office (ERÚ), 500 large-volume, 1,024 medium-volume and 24,670 small-volume customers decided to make a change as of November last year.

According to Bašta, the growing trend of energy provider changes will continue this year as well. Price offers of the respective suppliers still differ to such an extent that particularly larger-volume customers have a motivation for a change. However, apart from the price, companies should also be motivated by the terms of supply, such as the company"s flexibility regarding the set obligation to order a certain amount of energy. According to OTE director Jiří Šťastný, the development of natural gas supplier changes copies the number of changes in the field of electricity with a slight time delay that corresponds to the time of gas market liberation. An easier administrative procedure in connection with a natural-gas market operator also had an impact. According to Šťastný, the number of changes is also increased by the effort of customers to use a synergy effect when changing both commodities at the same time. According to Bašta, significant factors affecting the number of changes also include aggressive marketing campaigns and in some cases also unfair competition practices by some suppliers related to the growing competition on the supply side. According to the ERÚ data, the number of issued licences for natural gas trading experienced a higher increase in the previous two years; while 11 licences were issued in 2009, 38 were issued in 2010 and 27 in 2011. Last year, the ERÚ issued 155 licences for electricity trading, as opposed to 90 in 2010 and 48 in 2009. According to Bašta, in the future one can thus expect a higher emphasis to retain the existing customers. A new factor is the price competitiveness of the incumbent suppliers compared with the alternative ones. Therefore, smallest suppliers" market concentration, growing competition and customer transfers both from large to small providers and vice versa as well as from one large provider to another large one are probable.

Source: Česká informační agentura, s.r.o. (

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