An intention by RAE, the Regulatory Authority for Energy, to increase an Emission Reduction Tariff (ETMEAR) levied on electricity bills as part of its effort to wipe out the renewable energy source (RES) special account deficit has sparked tension between the authority and Production Reconstruction, Environment and Energy Minister Panayiotis Lafazanis, who wants to avoid price hikes on power bills.

Lafazanis has asked RAE to reexamine and revise its decision to avoid any electricity price hikes for households, adding that his ministry will exhaust all means to achieve this aim.

RAE had reached a decision on the ETMEAR hike late last year, on December 30, but kept the move under wraps as the country’s previous administration sought to avoid dealing with the issue in the lead-up to the January 25 snap elections. RAE’s decision ended up being published in the government gazette just recently, with a delay of over two months, leading to the current rift between RAE and the recently appointed minister, who, nearly two months into his tenure, is beginning to have to face up to the energy sector’s harsh realities.

Responsible for the effort to eliminate the RES special account’s deficit, RAE monitors the account’s inflow and outflow and makes adjustments twice a year, every June and December.

The planned ETMEAR increase is intended to cover amounts rechanneled by RAE to compensate the energy-intensive industrial sector for costs linked to carbon rights. The country’s previous administration decided to partially reimburse sums spent by industry for carbon emission rights as a means of bolstering competitiveness in the sector, a common practice in many other European countries. The amounts offered to industry for this purpose are derived from revenues collected by the state through carbon emission right auctions, which, prior to the move, were directly channeled into the RES special account, managed by LAGIE, the Electricity Market Operator.

As a result, RAE decided to increase the ETMEAR charge to cover the loss. If the ETMEAR hike is not to be implemented, a new measure of equal worth will need to be found.

The country has committed itself to eliminating the RES special account’s deficit as part of the bail-out agreement with creditors, and also to avoid a collapse of the energy market, currently a chain of debt running from one organization to the next.

The first major step taken to counter the RES special account’s deficit was the so-called New Deal, which entailed tariff cuts for RES producers, especially in the photovoltaic sector, despite agreements signed between investors and the Greek state. This move has cost investors about 500 million euros, annually.

Lafazanis, the energy minister, has declared an intention to limit the level of authority at RAE, within EU regulations.