June 20, 2024
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Serbia: The electricity prices for companies should decrease by 25%

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As electricity prices drop on European stock exchanges, Serbian businesses expect a corresponding decrease in electricity costs from Elektroprivreda Serbia (EPS), potentially by as much as 25 percent starting in May, according to industry experts. Should this adjustment not occur, businesses threaten to terminate their contracts with EPS and instead procure electricity from the stock market, where prices are significantly lower.

Minister of Mining and Energy of Serbia, Dubravka Đedović Handanović, indicated that electricity prices for commercial consumers will indeed decrease. She stated that authorities, in collaboration with EPS, are developing a new pricing methodology for commercial consumers, with anticipated reductions later in the year if the current market trends persist. This adjustment would also apply to gas prices.

Currently, businesses in Serbia with valid contracts pay approximately €120 per megawatt-hour (MWh) of electricity from EPS. Historically, these contracts were negotiated when stock exchange electricity prices exceeded this amount by about €10 per MWh. However, recent mild winters and reduced gas consumption have led to lower prices for electricity, making it cheaper on the free market than from state suppliers like EPS.

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Energy expert Željko Marković predicts a potential 25 percent reduction in electricity prices for businesses, given the current market conditions. With stock exchange prices hovering around €80 per MWh, Marković suggests that EPS should adjust its pricing accordingly for new contracts after April, failing which businesses may opt for market alternatives.

Since November 1, businesses in Serbia have been paying €120 per MWh for electricity from EPS, a price considered twice the producer cost. Previous increases in electricity prices occurred on January 1 and May 1, attributed to agreements with the International Monetary Fund (IMF) aimed at eliminating state subsidies to energy companies and financing essential investments.

While the IMF arrangement initially mandated further price hikes in May, Serbian authorities have denied this, emphasizing that political considerations are not influencing the decision-making process.

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