Brussels raises concerns over competition in local energy market

Despite the bailout progress made in nearing the third review’s finalization, the European Commission has identified a series of problems and delays concerning competition in Greece’s energy market, according to energypress sources.

An existing natural gas supply agreement between PPC, the main power utility, and DEPA, the public gas corporation, is one of the issues troubling Brussels authorities as it is believed to contain favorable terms benefiting the power utility. This agreement, for instance, does not include any terms leading to additional costs for PPC should its gas consumption exceed contracted amounts.

As for the electricity supply market, European Commission officials believe a supplier surcharge imposed on suppliers by the Greek government has absorbed 70 percent of discounts gained by independent suppliers at auctions.

Brussels officials have also noted that discounts made available to electricity suppliers through NOME auctions cannot be capitalized on the islands, where markets are affected by additional obstacles and existing tariffs do not offer profit margins.

A delay of about year in establishing a new flexibility remuneration mechanism in Greece is another matter preoccupying Brussels officials. This delay has led to benefits for PPC estimated to be worth between 120 million and 170 million euros.

A 15 percent discount offered by PPC to customers paying their electricity bills on time has also drawn the attention of Brussels officials as this intiative has forced independent suppliers to take similar action in an effort to remain competitive despite not having the leeway to do so. Market newcomers face elevated network development costs and other investment expenses not burdening PPC, the perennially dominant power utility.

In the Greek electricity production market, Brussels officials have concluded lignite-fired power stations remain active even amid loss-incurring conditions with the aim of preventing independent plants from operating.

Questions have also been raised as to whether PPC is benefiting from IPTO (power grid operator) decisions concerning the level of RES production permitted into the country’s energy system.

On a more general scale, Brussels also fears energy sector reforms currently being implemented may not be completed by August, when the country’s bailout agreement concludes. As a result, a new mechanism ensuring the continued implementation of these reforms could be needed once the bailout agreement has concluded.

A team of European Directorate for Competition officials had raided the PPC and IPTO a year about a  year ago as part of their investigation.