UPDATE 1-CEZ says to offer 2008 supplies on new exchange

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PRAGUE, April 19 (Reuters) - Czech CEZ , Europe's second largest electricity exporter, said on Thursday it will no longer hold power auctions and instead try to sell all of its free power through a new energy exchange.

CEZ Trading Director Alan Svoboda told reporters it will begin offering one-year, quarterly and monthly electricity supplies for 2008 on the new Prague energy exchange, which starts operations on July 1.

Prices for CEZ's direct custonmers will be derived from prices quoted on the energy bourse.

"It can be expected that the new exchange will become the main platform for wholesale electricity contracts for the year 2008, for more than 30 active traders on the Czech market who had earlier taken part in CEZ's wholesale auctions," he said.

CEZ said that while there was a 12 percent gap from prices in Germany, there has been a near complete convergence in shorter-term contract prices traded this year. "It can be expected that the situation will not change much in contracts for 2008," the company said in a statement.

One-year forward prices in Germany are now 54 euros/MWH for 2008.

Svoboda said the main price driver will be the situation in Slovakia, Hungary and the Balkans, where there is an increasing electricity shortage due to plant closures and growing demand.

Svoboda said CEZ expects 2007 output to rise 3.1 percent, year-on-year, to 63.9 TWH.

CEZ also said it would start releasing planned plant closure schedules to increase transparency.