The Slovenia Times

Electric Blues



Looking at the relationships between Slovenia's state-owned electricity companies sometimes feels like looking at the relationships in a particularly complicated step family. On one side of the family sits GEN Energija, the company which manages the nuclear power plant in Krško. Founded in 2006, the firm was created to allow for the privatisation of the other side of the family - HSE, the company which manages hydro power plants based on the Drava, Sava, and Soca rivers and coal-fired power plants in Brestanica, Šoštanj, and Velenje.

The decision to separate the two businesses seemed to make sense at the time. Given that the nuclear power plant in Krško is owned by both Slovenia and Croatia, it could not be involved in privatisation plans. Separate it off, though, and HSE could be privatised and competition created.

The problem? Four years down the line and those grand privatisation plans have still not come to fruition. HSE and GEN Energija are both still one hundred percent state owned. According to Economy Minister Darja Radić, there is therefore no longer any reason for the two companies to operate independently. She and her colleagues have issued plans to merge the two operations, reuniting the two sides of this complicated family.

One for, one against

From the Ministry's perspective there are many reasons for such a move. Radić argues that joining the two firms together would lead to a far more competitive presence in the regional electricity market. At present both companies are too small to be important regional players. Slovenian customers, meanwhile, would benefit from lower production costs and higher supply reliability thanks to optimised production and the company's greater investment potential.

HSE has declared itself happy with the plans. GEN Energija has not. Robert Golob - the Director of Gen I, the partly-private firm which sells electricity from the Krško plant - argues the proposal will have exactly the opposite of the desired effect.

"Joining both energy pillars would mean less competitive conditions for Slovenian citizens that would result in higher electricity prices," he argues.

Too late

Golob also believes that the companies are too deeply engaged in competitive activities to be reunited. He points out that the two firms have fundamentally different views on how to meet Slovenia's electricity needs - with GEN Energija building the power plant in Krško and HSE dedicated to the controversial thermal power plant in Šoštanj.

The thermal plant is a project that many at GEN regard as questionable, risky and extremely expensive. Radić and her government colleagues, meanwhile, point out that NPP Krško has the lowest electricity production costs in Slovenia - and that some of the profit made goes into the privately operated part of Gen I.

Troubles with distribution

Matters are no less simple when it comes to reorganising the distribution of electricity in Slovenia. Historically five companies in Slovenia managed the distribution infrastructure and were responsible for selling electricity to households. But to comply with European Union legislation that had to change - companies could not be responsible both for managing infrastructure and for selling power.

With the establishment of SODO, a new distribution system operator, it was thought that the issue had been solved. It seems it wasn't: an investigation by the Court of Audit has unveiled irregularities and revealed that SODO has been overpaying the five electricity companies. The results, again, is that public money has gone into private hands.

The Directorate for Energy is therefore proposing separating distribution infrastructure management from trading. It is a proposal that has been met with opposition by union members and so one which, just as with the GEN Energija and HSE plan, remains mired in controversy. The National Energy Programme, soon to be issued by the Ministry of the Economy, should make clear which plans the government wants to pursue when it comes to electricity in Slovenia. Judging from the current controversies, anyone who thinks the Programme will have a smooth journey is probably set for an electric shock.

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