The limited electricity amount offered at yesterday’s NOME auction, the third session for the year, combined with an urgent collective need by power supply firms to secure energy at a fixed price as protection against adverse market conditions seen driving up electricity wholesale prices around Europe, generated intense bidding to drive auction price levels up to unsustainable levels.
This development will ultimately subdue retail electricity market competion over the next few months. Independent electricity suppliers are already placing their hopes on the next NOME auction, the final session for the year, scheduled for October.
Sources at certain electricity supply firms informed that the lofty price levels reached at yesterday’s auction either wiped out or severely diminished profit margins, adding that certain mid-voltage category customers hold contracts offering electricity tariffs below yesterday’s NOME price levels of 43 euros per MWh.
Such wholesale electricity price levels, combined with other costs, lead to a total cost of approximately 60.5 euros per MWh, which exceeds the amount paid by certain customers for their mid-voltage electricity supply.
It is a similar picture for the low-voltage category, where NOME prices of 43 euros per MWh lead to an overall cost of approximately 65 euros, leaving independent suppliers with hardly any leeway to maneuver and compete against PPC, the main power utility.
NOME auctions were introduced in Greece last October to offer third parties access to PPC’s low-cost lignite and hydropower sources.
The European Commission has been pushing for greater electricity amounts at Greece’s NOME auctions so as to prevent explosive bidding, as was the case yesterday, and keep wholesale electricity prices at sustainable levels.
An increased amount of over 700 MWHh will be offered at October’s session, based on recent bailout revisions made to conclude the agreement’s second review.
A starting price of 32.05 euros per MWh was set for yesterday’s session, well below a level of 37.37 euros per MWh that applied for previous auctions.