Alternative energy provider Bohemia Energy announced on Wednesday that it is closing down immediately.
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The largest group of alternative energy suppliers served about 900,000 clients, who now automatically switch to the so-called supplier of last resort for a period of six months.
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“The closure or bankruptcy of a company of a similar size does not come often. Even less frequent is the termination of the company’s activities in the energy sector and other heavily regulated or directly network industries, “Pavel Peterka, the chief economist of the Roklen Group, told Novinka.
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“Regulation in these sectors often takes into account the very characteristics of operating companies in order to ensure the stability of supply of key economic goods such as gas, electricity, etc. Simply put, so that these situations do not occur,” Peterka explained.
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According to Peterka, this shows that the rule too big to fail has its limit.
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“After all, Bohemia Energy served 1.23 million customers and had annual sales of 23 billion crowns,” said Peterka.
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“Such companies rarely leave the market. It can therefore be speculated that there were probably internal problems in the areas of risk management and the so-called price assurance of the purchase of key commodities in the future, which customers began to feel. They thus began to move towards competition at a relatively brisk pace, “added the economist.
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Energy markets analyst and minority shareholder CEZ Michal Šnobr pointed out that something similar had already happened in 2009 in the event of the collapse of Moravia Energo.
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“After Moravia Energo, relatively large debts remained and ČEZ also ‘corrected’ them. It also affected his financial results. The case is really very similar. It was created for the same reasons and at a time of unprecedented growth in electricity prices after the introduction of the EU ETS market, “said Šnobr when asked by Novinek.
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“The failure of Bohemia Energy is a copy. Now it doesn’t matter where Bohemia Energy consumers end up. They have six months to do it. It is and will be much more important what debts and to whom Bohemia Energy has, “added Šnobr.
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The company has not yet shown signs of financial problems and has not applied for protection from creditors. According to his own statement, it is reacting to the change in the energy market.
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“This will be the most interesting part of the whole story. They are now closing down to take care of gas and electricity consumers through the mechanism of the supplier of last resort, “admitted Šnobr.
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Only then will the action concerning Bohemia Energy continue. Their creditors will start to swarm and another will result, “believes Šnobr.
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“The failures of similar giants are commonly associated with their buyout by competitors. However, in the context of the energy market, this can be a problem where the competition offers a very similar product, which it can offer to outgoing clients under its own brand, ”added Peterka.
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The question is what the current development will mean for the Czech energy market.
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“It simply means repeatedly for the market. So-called instantaneous heaters (they do not produce and distribute electricity, but only buy between the producer and the consumer) are nice, but in times of rapid changes or instability in the energy market, they are often perishable, “said Šnobr.
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“As a result, the market will narrow. I would not anticipate other consequences yet. I think that there is no risk of cartelisation for both gas and electricity. Energy commodities are traded on the markets and the development of prices is not influenced by Czech electricity producers or gas traders in principle, “added Šnobr.
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According to Peterka, there are currently no concerns about a possible restriction of competition.
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“At least until the conditions for entering the market are tightened. The current conditions are quite favorable for new electricity suppliers. However, in response to the cessation of Bohemia Energy’s activities, a certain tightening of legislation can be expected, especially in the area of risk management, “he stated.
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“However, the tightening may also affect market entry, which can be seen as a potential risk to restrict competition in the energy market. Let us hope that the authors of the legislation will reflect this risk in the event of a stricter tightening of the rules, “added Peterka.
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