A decision announced yesterday by the Hellenic Competition Commission, a protector of free competition, on complaints by Aluminium of Greece against the main power utility PPC intervenes on three levels and sets new standards for the industrial sector’s high-cost energy problem.
Firstly, the decision considers that PPC maintains a dominant position in the electricity production and retail markets. Secondly, the Competition Commission’s decision assumes that Aluminium of Greece and, by extension, all other energy-intensive industrial consumers, are dependent on PPC for energy and, as a result, are unable to seek alternative energy suppliers. If no changes are made, the dependence of industrial consumers on PPC will continue to shape ties between the two, the committee noted.
Thirdly, the Competition Commission stressed that PPC must agree to individualized tariff agreements with its industrial consumers and not proceed unilaterally. This detail establishes a serious issue with regards to recent decisions reached at a PPC general shareholders meeting, as it gives major industrial consumers the right to dispute PPC’s tariffs. The Competition Commission noted PPC’s tariff levels need to take into account the respective profiles of industrial consumers and comply with market regulations.
PPC maintains a monopoly in lignite-fired and hydropower electricity production, both lower-cost methods that enable the utility to operate without interruption and maintain its market dominance, the commision’s decision noted. On the contrary, independently run natural gas-fueled power stations operate for shorter hours, whenever required by the market’s needs, the commission added. The committee’s decision criticized PPC’s policy, which, it noted, seeks to sideline rival independent electricity producers by limiting their market shares and bolstering its own standing in production and wholesale supply.
The commission also pointed out PPC’s dominance in the retail electricity market, where the utility holds market shares of 95 to 100 percent, in the low and high-voltage sectors, respectively.
Commenting on Aluminium of Greece – the country’s largest energy consumer – and, by extension, the energy-intensive industrial sector, the committee made noted of the aluminium producer’s particular needs and traits. The cost of energy for Aluminium of Greece comprises the main production cost for the enterprise, as is also the case for the energy-intensive industry as a whole, the committee stressed. This cost may even exceed that of raw materials, it added. The committee stated that Aluminium of Greece is dependent on PPC as it has no alternative energy supply sources.
The local Competition Commission, an independent body, also noted PPC’s declaration that it will refuse to supply electricity to Aluminium of Greece is unjustifiable.
The committee’s decision comes as the fourth to offer support to Aluminium of Greece in its dispute with PPC, following rulings by RAE, the Regulatory Authority for Energy, a court verdict, as well as the European Commission’s Directorate-General (DG) for Competition.