Emergency check in Feb may spark hydropower unit sales

The electricity market will be subject to a comprehensive emergency assessment in February, which could prompt the need for further “structural measures”, or, more specifically, a plan for the sale of additional state-controlled main power utility PPC units, according to a term included in the bailout agreement following its third review.

This emergency assessment, to be conducted as an extra measure in addition to inspections already agreed to for every six months, will examine whether NOME auction terms require revisions, the progress made with the target model – a process entailing the electricity wholesale market’s harmonization with EU law – as well as other matters.

In previous bailout-related matters, the term “structural measures” was applied as a soft, indirect reference to the possibility of PPC lignite units, a procedure now underway, and is being used again to imply the sale of PPC hydropower units, widely seen as a taboo subject by Greek government and PPC officials.

The Greek government firmly opposes any talk of prospective PPC hydropower unit sales.

However, PPC has fallen way behind in its bailout-required retail electricity market share contraction targets. The utility’s market share currently stands at around 84 percent, well above the 75.24 percent target level set for the end of 2017. In the longer term, PPC needs to reduce its market share to less than 50 percent by 2020.

These figures indicate the NOME auctions may have offered some support to keep independent electricity suppliers afloat but have failed to produce the required market share contraction results at PPC. The situation is expected to spark talks for more structural measures.

Electricity amounts offered through the NOME auctions, introduced slightly over a year ago to provide independent suppliers with access to PPC’s low-cost lignite and hydropower sources, are expected to be reduced as PPC’s lignite unit sale plan progresses. A market test is scheduled to take place in January ahead of the sale’s launch early in the summer.

On another crucial front, the European Commission’s Directorate-General for Competition’s is currently investigating whether PPC has abused its dominant market position. DG Comp officials raided the headquarters of PPC and IPTO, the power grid operator, a few months ago. A decision against PPC would entangle hydropower facilities, being monopolized by the utility.