CEZ AS (CEZ), the biggest Czech utility, headed for its worst weekly slump in 16 months as the price of electricity tumbled to an all-time low.
The stock fell 1.5 percent to 612.5 koruna by 2:37 p.m. in Prague, taking its loss in the past five days to 6.2 percent. A close at that level would be the lowest since October 2008 and mark the steepest weekly retreat since September 2011.
Next-year power in Germany, where CEZ exports part of its output, fell as a dispute within the European Union over its cap-and-trade system sent the cost of carbon allowances down 27 percent in the past three days. That may hurt profits at CEZ, which has lower emissions than most European generators, said Marek Hatlapatka, an analyst at Cyrrus AS brokerage.
“Since CEZ’s emissions are below average thanks to nuclear plants, falling carbon permits squeeze the company’s margins,” Hatlapatka said today by phone from Brno in the Czech Republic. “The market with emission allowances seems to be falling apart and the price nearing zero is negative for CEZ.”
Falling carbon prices are reducing the profitability of investments into low-emission technologies, Hospodarske Noviny newspaper reported today, citing CEZ Trading Director Alan Svoboda. The utility generates more than 40 percent of its output from zero-emission nuclear power stations and operates the world’s largest wind park in Romania.
The European Parliament’s industry committee yesterday recommended rejection of the European Commission’s plan to curb an excess of permits by delaying their issuance. The proposal, designed to lift the cost of pollution and push generators toward cleaner technologies, is “absurd” and will hurt German industry, Joachim Pfeiffer, economy spokesman for Chancellor Angela Merkel’s CDU party, said yesterday.
CEZ shares have lost 9.7 percent this month, compared with a 1.3 percent advance for PGE SA (PGE), Poland’s largest electricity producer. Poland is the main opponent of the commission’s plan because it has no nuclear plants and relies mainly on high- emission power stations burning brown coal.
“Allowance prices are likely to stay low until big states such as Germany clarify their stance on this issue,” Petr Bartek, an analyst at Ceska Sporitelna AS in Prague, wrote in an e-mail to clients today. “Their decline is negative for CEZ, while being positive for example for Poland’s PGE.”
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