Major market players hesitant, small firms fearing conditions

Given the market’s current conditions, 2017 is developing into a tricky year requiring extremely cautious moves from independent electricity suppliers, despite the fact that the main power utility PPC faces a bailout obligation to surrender 15 percent of its clients.

The still-dominant PPC’s electricity market share needs to contract to 75.24 percent by the end of this year, from just below 90 percent at present. Under ideal conditions, this target alone would serve as a major incentive for the independent suppliers to pursue ambitious initiatives.

Obstacles to their free movement include forecasts of a high-level System Marginal Price (SMP), which shapes wholesale electricity prices; the uncertainty surrounding a RES-supporting supplier surcharge, which has shot up to unexpectedly high levels; the competitive bidding at the recently introduced NOME auctions, which has driven up prices paid for electricity amounts by independent suppliers through the procedure, as well as the country’s ongoing political and economic uncertainty.

Besides insufficient new intervention by RAE, the Regulatory Authority for Energy, on the supplier surcharge, not expected to reduce the surcharge level to a maximum of 5 euros per MWh, seen by independent suppliers as the most their ventures could afford to remain sustainable, suppliers are also concerned about future surcharge fluctuations. These concerns are negatively impacting the commercial policies of suppliers.

Certain suppliers who had offered low-priced tariff deals to clients, especially in the mid-voltage category, as part of their aggressive policies seeking market share gains, are now operating at a loss as a result of the higher-than-expected SMP levels. Low prices ensured at the inaugural NOME auction last October had encouraged aggressive pricing policies.

Overall, all suppliers, big and small vertically integrated and not, are confronting issues. However, the respective abilities possessed by these firms to respond to the challenges do vary.

The major independent suppliers – Protergia, Heron, Elpedison and Volterra – are moving hesitantly as they await further market clarity. The smaller players – Watt + Volt, NRG Trading and Green – are greatly concerned about the market’s developments.