Deadline nearing for PPC’s new cost-based industrial tariffs

The main power utility PPC and the country’s major industrialists need to reach respective agreements for new tailor-made, cost-based electricity tariffs, replacing a 20 percent discount, by December 7, when PPC is scheduled to stage an extraordinary shareholders meeting to approve the discount’s abolishment as well as the new industrial tariffs, both bailout demands.

At this stage it is believed the power utility and one industrial enterprise have reached a verbal agreement on a new tariff deal. Sources noted this agreement is based on 2014 price levels without the 20-percent discount, covers a two-year period, and has been adjusted according to the industrial enterprise’s profile.

It remains unknown whether agreements between PPC and other industrial firms have been reached. PPC has noted it is holding negotiations with most high-voltage industrial consumers, describing the overall progress as favorable. Some industrial enterprise sources acknowledged being engaged in talks with PPC but do not regard them as official negotiations. Other sources insist that more than just one industrial enterprise is close to finalizing a new tariff deal with PPC.

Interestingly, PPC, perhaps as part of its negotiating policy, is claiming that its operating costs have increased, despite the significant drop in international oil prices, the utility’s payroll costs, as well as the abolishment of costly producer payment systems, such as the Variable Cost Recovery Mechanism, locally acroymed MAMK – applied to help cover power station start-up costs – and CATs.

Although these developments are favorable for PPC, the utility claims its operating costs have increased in 2015, primarily as a result of its reduced lignite production. Certain sources said PPC’s current costs at its lignite-fired power stations are well over the 57-euro level per MWh determined by a well publicized PPC cost study and, in fact, are close to 70 euros per MWh.

It is believed that industrial consumers have rejected these claims in their current talks with PPC officials. Whatever the case, a clearer picture on PPC’s new tariffs for industrial consumers is expected within the next few days, except for a case concerning Aluminium of Greece, given a longer, three-month negotiating period, which has been approved by the lenders.