Energy crisis measures to not fully absorb price increases

Energy-crisis support measures expected to be announced by the government today will include universal coverage for all households, regardless of whether these are primary residences or not, through a combination of measures including a wholesale market price cap and subsidies, which, however, will remain realistic and not reduce energy costs for consumers to pre-crisis levels.

The set of measures, to be announced by Prime Minister Kyriakos Mitsotakis, will combine a universal price cap in the wholesale electricity market with retail electricity market subsidies focused on specific categories, namely low consumption and low-income households.

The wholesale market price cap will not be set too low in order to keep its resulting cost at a manageable level. The government’s measures will attempt to cover between 70 to 80 percent of wholesale price adjustment clauses included in electricity bills, triggered by suppliers to cover higher wholesale electricity costs.

The effectiveness of the government’s plan remains to be seen. The package of measures is said to be worth at least 4 billion euros, annually, and will be divided into the 2022 and 2023 state budgets. This year’s budget is expected to take on at least 2.5 billion euros of this cost.

All Energy Transition Fund money will need to be used for the effort along with an additional sum of over one billion euros from the state budget.

Energy price increases will not be fully absorbed by the measures as the government will seek to maintain the primary deficit at 2 percent of GDP.