Serbia’s power utility EPS posts Q1 net loss of EUR 254 million

Serbia’s state-owned power utility Elektroprivreda Srbije (EPS) has reported a net loss of EUR 254 million for the first quarter of 2022, on operating revenues of EUR 822 million, blaming the poor result on a drop in output, electricity imports, and capped prices for end-consumers.

The huge net loss was the result of the company’s “significantly deteriorated performance” in the final quarter of 2021 and the first quarter of 2022, according to the report. Up until the end of September 2021, EPS had been recording sufficient production and good financial results, with a profit of EUR 72 million and operating revenues 7% above plan, according to the document.

Electricity output dropped 21% year-on-year in Q1 2022

In the fourth quarter of 2021, EPS’ electricity production declined to 91.3% of the target, due to reduced output at thermal power plants, which generated 80.7% of the planned amounts. In the first quarter of this year, the decline in output was even sharper, 21% year on year, with hydropower plants generating 30% and thermal power plants 16% less than they did in the same period a year earlier.

The reasons for the decline in production, according to EPS, were the poor quality of coal from its mining complex Kolubara, a delay of a planned overhaul of thermal power plant Nikola Tesla (TENT) B, and outages at TENT, as well as the unfavorable hydrological situation in 2022.

EPS spent nearly EUR 500 million on electricity imports in the two quarters

During Q4 2021 and Q1 2022, EPS increased power purchases, buying EUR 289.7 million worth of electricity in the final quarter of last year, at EUR 232.8 per MWh, or EUR 278.7 million above plan. In the first quarter of this year, the state power utility spent EUR 219.2 million on electricity, whereas in the same period a year earlier it did not buy any.

In March, EPS paid EUR 285.5 per MWh for electricity and sold it at EUR 66.4 per MWh

In line with the government’s decision, EPS continued to supply customers with electricity at unchanged prices after the end of October, instead of setting market-based prices, and by March, it found itself buying electricity at EUR 285.5 per MWh and selling it at EUR 66.4 per MWh.

The green energy surcharge paid by consumers was not enough to cover EPS’ cost of buying electricity from privileged producers

The RSD 0.437 per kWh surcharge to incentivize renewable energy, paid by consumers, was insufficient for EPS to cover the costs of its electricity purchases from privileged green energy producers, which pushed the power utility further into the red in both Q4 2021 and Q1 2022, according to EPS’ report.

Other reasons for EPS’ poor results include higher prices of accessing the power transmission and distribution systems, increased fuel oil and natural gas use, the transfer of the entire amount of TV license revenues to state broadcasters RTS and RTV, as well as the failure to raise electricity prices for households even though a 3.4% hike had been approved to take effect from February 2021.