Hydropower output needs to be offered for lower NOME starting price

Judging by the government’s current negotiations with creditor representatives, the NOME auction plan, intended to provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources, is no longer being viewed as the basic tool that will reduce the utility’s retail electricity market share by 25 percent in the short term and 50 percent by 2020.

Even so, the NOME model prepared by the energy ministry, which includes revisions proposed by the country’s lenders, appears likely to be legislated, even if just for a brief period of time.

In order to make NOME auctions appealing to suppliers, they will apply for the short term, while starting prices will be set at current System Marginal Price (SMP) levels, possibly even lower, energypress sources have informed. A starting price of about 40 MWh is likely to be set, following discussions yesterday between energy ministry officials and the creditor representatives.

If this starting price level is to be achieved, then PPC will need to accept assumptions concerning its operating costs, which it has rejected to date. Various authorities believe the utility is overpricing its operating costs. PPC will also need to offer electricity produced by its hydropower facilities, not just lignite-fired power stations, if lower NOME auction starting prices are to apply.