Industry: CAT plan serves PPC units sale, not market needs

The industrial sector has serious objections to a finalized CAT remuneration plan prepared by RAE, Greece’s Regulatory Authority for Energy, and delivered to the energy ministry, which will seek the European Commission’s approval.

Industrial sources believe the ministry is aiming for the remuneration mechanism to be activated whenever it is determined that excessively high prices are causing problems in the market, along the lines of an Italian model.

However, the key problem in the Greek market is sufficiency, not price levels, especially now that a number of older power stations are planned to be withdrawn from the system, industrialists have noted.

The new CAT mechanism plan has also raised questions about the future of the demand response mechanism (interruptability) – compensating major-scale consumers, such as industrial enterprises, when the TSO (IPTO) asks them to shift their energy usage (lower or stop consumption) during high-demand peak hours, so as to balance the electricity system needs.

In addition, a public consultation procedure on the new CAT model has not been staged. Such a mechanism can only be adopted if the market and all participants offer their consent, one source told energypress.

However, the industrial sector and electricity producers will be hard pressed to agree to such a plan whose objective is clearly to reinforce the sustainability of lignite units as a means of ensuring the main power utility PPC’s successful bailout-required disinvestment of lignite units – in terms of sale price achieved.

The finalized power compensation mechanism delivered by RAE to the energy ministry does not make any distinctions that exclude lignite-fired power stations from CAT payments, sources have informed.

According to the RAE plan, CAT payments would be made available through annual auctions offering Reliability Options four years in advance. CAT payments would be valid for one year for existing facilities, while new units would secure CATs for seven years, as an investment and financing incentive, according to the plan.