Independent firms, facing tight conditions, turn to hike clause

Many, if not most, independent electricity suppliers, moving to counter stifling market conditions caused by higher wholesale prices that are severely narrowing profit margins, have begun activating a System Marginal Price (SMP) clause for proportionate upward adjustments of charges in an effort to remain sustainable.

SMP, or wholesale price, levels of up to 55 and 60 euros pr MWh are regarded as an upper limit before the clause, included in supplier agreements but not resorted to until now, is activated. In recent times, however, the SMP has consistently stood at over 65 euros per MWh.

Until now, independent suppliers have hesitated to activate this SMP clause fearing negative customer reactions, but market conditions have tightened up too much for it to be neglected.

The still-dominant main power utility PPC is continuing to offer customers a 15 percent discount for punctual electricity bill payments.

Besides the higher SMP levels, independent suppliers have had to absorb elevated prices at recent NOME auctions – these were introduced about two years ago with the intention of making lower-cost electricity available to emerging players – and have also faced difficulties importing lower-priced electricity from abroad.

Independent electricity suppliers fear 2019 could be their most difficult year yet since emerging relatively recently. A supplier surcharge is set to be lifted but all other market conditions are seen as unfavorable.