Details emerge on formula to determine NOME starting prices

Three factors will be applied to the formula determining starting prices of the upcoming NOME auctions – timing of each auction; System Marginal Price (SMP) of each specific period, and a fixed amount deduction – according to market authorities.

The officials believe this formula – more or less – will be adopted and included in a multi-bill containing various bailout-related requirements. The multi-bill is expected to be submitted to Greek Parliament for ratification next Tuesday.

According to the authorities, the SMP will be taken into account and an amount of between three and four euros per MWh will be deducted. The officials said a deduction of this magnitude promises to offer fair starting prices for all NOME auction participants. Starting prices will not be too high for bidders and not too low for PPC, the main power utility.

NOME auctions will provide third parties with access to PPC’s low-cost lignite and hydropower sources as part of the bailout-related obligation to help break the utility’s dominance.

A recent leak of details added to Greece’s third bailout deal, as conditions for the completion of the first review, indicated that the first NOME auction will be held this coming September. Electricity offered to traders through NOME auctions in 2016 will need to measure eight percent of the total amount of electricity used in the grid in 2015.

Acording to data provided by IPTO, the power grid operator, the level of electricity used in 2015 totaled 51,430 GWh, meaning that the NOME auctions in 2016 will need to offer a total of 4,114 GWh.

The market views the upcoming NOME auctions as a transitional tool that will concern 2016 and 2017, a period during which PPC’s prospective partnerships with private-sector firms are expected to make progress and also help reduce the utility’s market share.

The degree of success of these initiatives will presumably determine the shape of ensuing PPC-related measures, including whether TAIPED, the State Privatization Fund, will privatize a 17 percent stake of the utility it holds in its portfolio.