UPDATE 1-Czechs to open electricity exchange

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The Prague Stock Exchange will open an electricity futures market next year, which should help raise price transparency, PSE chief Petr Koblic said on Wednesday.

The new market, promoted jointly by the PSE, the Industry Ministry, and the electricity market operator OTE, should start operating in June. It will trade monthly, quarterly and one-year futures, Koblic said.

"We want the new commodity exchange to become a significant regional player in a short time," he told a news conference.

It could eventually lead the dominant power producer CEZ to sell part of its capacity through the exchange, CEZ spokesman Ladislav Kriz said.

CEZ now offers most of its free capacity in auctions, which set a price benchmark for other CEZ contracts, such as sales to its own distribution networks.

"We will be trading there, and we are interested in being a market maker," Kriz said.

"It will depend on how the market develops if this will in the future replace sale through auctions," he said.

CEZ would not be forced to sell all of its capacity through the exchange as daily Mlada fronta Dnes reported on Wednesday, an industry ministry spokesman said.

CEZ is the Czech Republic's most profitable company, with 27.3 billion crown ($1.30 billion) profit last year, and the largest electricity utility in central Europe.

Analysts have said any change in CEZ's pricing rules was unlikely to prevent power prices in the European Union member state from creeping up towards higher levels in neighbouring countries in West Europe.

[PRAGUE/Reuters/Finance.cz]