Independent power suppliers facing tougher conditions

A decision reached by RAE, the Regulatory Authority for Energy, last Friday to set an upper limit averaging roughly of 14 euros per MWh on the RES-supporting surcharge to be paid by electricity suppliers into the RES special account for January and February came as welcome relief for them following the surcharge’s recent sharp rise to levels of as much as 42 euros per MWh. The surcharge is revised weekly.

This measure will be effective retroactively and cover the extraordinarily high surcharge levels registered reached during the first three weeks of January.

Even so, electricity suppliers, who entered the liberalized market feeling more optimistic, have begun feeling some concern over the electricity market’s prospects in 2017, the key reason being elevated System Marginal Prices (SMP) maintained in the market, despite the implementation of the surcharge’s upper limit.

Electricity supply company officials have forecast unfavorable SMP levels for 2017, which is not good news as the SMP represents the wholesale price at which suppliers purchase their electricity amounts.

The situation is made worse by the fact that certain electricity suppliers, in their effort to make market share gains, have, in recent times, signed agreements with clients offering lower tariff levels, especially in the medium-voltage category. Amid the current market conditions of higher costs, these agreements can only be serviced at a loss.

An aggressive pricing policy maintained by the main power utility PPC, through a series of discounts offered since last summer, appears to be producing results as the still-dominant utility’s market share has proven resilient. Bailout terms require PPC to gradually reduce its market share to less than 50 percent by 2020.

A second NOME auction to offer 145 MWh is scheduled for January 31. The NOME auctions were introduced last October to break the utility’s dominance by offering other traders access to PPC’s low-cost lignite and hydropower sources.

Pundits anticipate more intense bidding at this upcoming NOME auction session, offering a smaller amount compared to last October, as suppliers will be out to secure lower-priced electricity in an effort to stay afloat amid an environment of higher SMP levels.

According to latest, end-of-December data provided by LAGIE, the Electricity Market Operator, PPC holds an 89.83 percent share of the country’s electricity market, up 1.17 percent since November.

Among the independent suppliers, Protergia leads with a 2.69 percent share, followed by Elpedison (2.42%), Heron (2.35%), Watt + Volt (0.76%), NRG Trading (0.66%), Volterra (0.52%) and Green (0.35%).