BRATISLAVA, February 7, (WEBNOVINY) — Allocation of EU emission allowances (EUA) via auctions should not push up the end-user electricity prices for households. “Modification of allocating EUA within the European Union Emissions Trading Scheme is unlikely to result in higher electricity prices after 2012. Electricity prices may increase in the future but only as a consequence of the fluctuating carbon market prices or other factors but not because of the EUA allocation mechanism,” opines the Financial Policy Institute (IFP) at the Finance Ministry.
Slovakia should change the system of granting emission allowances from free allocation to allocation via auctions as of next year. Pollution costs which are already comprised in electricity prices for households account for 6 percent of the end-user price. Almost all emission allowances in Europe that represent costs on pollution are allocated to companies for free. They are subsequently transposed in end-user prices in form of opportunity cost. “Selling emission allowances immediately after allocation is a much elegant solution. When emission allowances are allocated for free, opportunity costs are translated in prices and unexpected profits occur. On the contrary, when allowances are allocated via auctions, companies face real costs and revenues flow in state coffers. Nevertheless, the end-user electricity price is the same,” explained the institute.
The Financial Policy Institute believes that there is no reason why the Regulatory Office for Network Industries (URSO) should increase over the revised emission allowances allocation mechanism, although the electricity prices for household are still regulated in Slovakia. “If the market price and regulated fees on the German market do not change, prices for Slovak households will not change either,” concluded the institute.
SITA
