IEA, Brussels pushing for end to subsidized electricity program

The International Energy Agency (IEA), in its latest report on Greece, presented today, has proposed the elimination of energy sector subsidies such as the Social Residential Tariff (KOT) program offering subsidized, lower-cost electricity for underpriviledged households.

The IEA report also includes a proposal from the European Commission for the elimination of the social residential tariff program for electricity, according to the energy ministry’s secretary general Mihalis Veriopoulos. Greece, along with Italy and Spain, facing equivalent demands, all oppose the proposal, he added.

Veriopoulos informed that an agreement has been reached for the KOT program’s elimination in ten years, not five, as was originally proposed.

The IEA’s executive director Fatih Birol, noted, during the report’s presentation, that support for vulnerable social groups should not be provided through subsidized electricity tariffs but alternative tools instead, possibly tax-based.

“The subsidization of tariffs is not an appropriate method for reducing energy poverty,” noted Birol, who added that energy prices in Greece, compared to other countries, stand at average levels, both for electricity and natural gas.

KOT subsidies in Greece are accumulated through a surcharge imposed on electricity bills.

Greece, like all other IEA members, is examined every five years, Birol noted, adding that major achievements have been made while exceptional work is in progress.

The IEA head cited the high penetration rate of the RES sector, especially the PV sub-sector, in the Greek energy market, as well as the progress being made in the energy security domain through the construction of new pipelines such as the TAP gas infrastructure project.

The IEA head avoided expressing any specific views on matters such as an ongoing bailout-required procedure to lead to the sale of main power utility PPC units, or the utility’s hydropower monopoly.

Greece remains focused on its strategic objectives aiming for energy sector reforms and the RES sector’s market share increase, while the country intends to implement the Paris climate agreement, Greek energy minister Giorgos Stathakis stressed.