Creditor discretion on NOME starting prices raises thoughts

The country’s creditors have told Greek officials to press on with introducing NOME-type auctions to the local electricity market and that they will not intervene on the procedure to determine starting prices, energypress sources have informed.

Setting the starting prices of the NOME-type auctions is a matter for local officials to work out, based on main power utility PPC’s lignite-based power production costs, the creditors – led by the European Commission, which is observing the effort for reforms in Greece’s electricity market with the aim of breaking PPC’s dominance – have told Greek officials, according to the same sources.

This could, as an initial interpretation, mean that the country’s creditors do not want to force PPC to sell its lignite and hydropower generated electricity at below-cost levels.

However, concerns have been raised as to how PPC will go about calculating its productions costs as a basis for setting auction starting prices. If these are overpriced, the auctions will surely fail to draw independent suppliers into the market as part of the effort to reduce PPC’s wholesale and retail electricity market shares.

A deeper analysis of the discreet stance on the issue being maintained by the country’s creditors may suggest they are hoping for the NOME-type auction effort to ultimately fail, which would activate plan B, or the part-privatization of PPC, through the sale of a breakway unit dubbed “Little PPC”.

Occasional meddling on the matter by the country’s creditors, especially the European Commission, has made clear that the NOME-type auctions plan is not being regarded as a fixed solution that can create conditions of permanent competition in Greece’s electricity market. Instead, the auctions are being viewed as a transitionary measure to pave the way for a more permanent model allowing third parties access to PPC’s low-cost electricity production. In essence, the country’s creditors believe the “Little PPC” option remains the most effective way of achieving this objective.