DG Comp approves temporary CAT plan, starting in May

The European Commission’s Directorate General for Competition has approved a new transitional CAT system for Greece’s electricity production facilities, based on a proposal submitted by local officials, according to information obtained by energypress.

The Greek government was informed of the decision yesterday following a series of postponements and delays that deprived local electricity producers of CAT-related payments for the entire 2015 and will do likewise for most of the first half of 2016.

RAE, the Regulatory Authority for Energy, is likely to decide today on the next moves leading to the CAT plan’s implementation, especially whether the procedure will need to be channeled through Parliament or RAE approval, alone, could suffice.

Any chance of the plan being applied retroactively has already been ruled out. According to prevailing opinion, the transitional CAT mechanism could come into effect in early May. Greek government sources have ascertained that no further delays will be made, a pledge that remains to be seen.

Based on the bailout agreement reached with the country’s creditor representatives, the temporary CAT mechanism will be valid for one year, unless the permanent CAT mechanism already being worked on by RAE is introduced prior to this twelve-month period. Such a development, which could lead to the implementation of the permanent CAT mechanism by the end of the year, has not been ruled out.

The temporary mechanism’s total cost for the twelve-month period is 225 million euros and will provide payment for electricity unit production at a price level of 45,000 euros per MW.

As for the fixed CAT mechanism, energypress sources informed that it could be based on the UK model, shaped as an auction capacity system without pre-determined prices. The main reason for such an approach is the need for a model offering stability for all parties involved and which can be implemented for as many years as is necessary.

All electricity production units – lignite-fired power stations, natural gas-fueled facilities, and hydropower plants – will be able to take part in the auctions. Consideration is being given to not offering CAT payments for units whose investment costs have been amortized, or significantly reducing CAT payments for older units. The European Commission has made these requests, which Greek authorities are obliged to take it into account.