First-round NOME talks with lenders offer hope for solution

Greek energy sector authorities are hoping that a NOME-type auctions model proposed to the country’s lenders during a first round of negotiations will be accepted as a plan that is fit to meet a bailout requirement for the immediate reduction of main power utility PPC’s retail electricity market share by 25 percent in the immediate future and 50 percent by 2020.

According to energypress sources, creditor representatives did not raise major issues during the talks on the NOME plan, to provide wholesalers access to PPC’s low-cost lignite-fired electricity production. However, participating officials admitted the task is difficult and agreed on the need for a trial period during which the model’s effectiveness will be appraised.

The Greek delegation, comprised of officials from the energy ministry, RAE, the Regulatory Authority for Energy, and PPC, have recommended beginning by offering to the market an electricity quantity of between 300 and 400 MW to test demand. A fully operational NOME model, it is estimated, may be ready by 2017, offering leeway for the transfer, by 2020, of 50 percent of PPC’s customers to other power retailers.

Greece’s plan has not been officially submitted to the lenders, but, instead, was presented as a rough guide to be further processed, if needed, until the end of October.

Figures concerning the starting price of the NOME auctions, a crucial detail, were not mentioned during the first-round talks. The model worked on by RAE does not offer specific figures but, instead, a formula on how to determine starting prices. Most insiders agree that a middle-of-the-road solution will be implemented. PPC has asked for a price of 59 euros per MW, considered too high to draw wholesalers to the auctions, while an older court verdict had ruled the price level should be set at 36 euros per MW.

The RAE proposal does not integrate emission costs in order to limit PPC’s exposure to the extremely volatile nature of the emissions market.

RAE is currently examining various hurdles that may obstruct consumers from transferring from PPC to other power retailers. The power utility has proposed that consumers owing substantial electricity bill amounts not be permitted to transfer to other retailers. RAE has not ruled out this proposal and is looking at how other European markets deal with such issues.