IPTO pressured to hasten interconnections, reduce fees

IPTO, the power grid operator, currently preparing to submit its updated 10-year investment plan, covering 2019 to 2028, to local authorities around March, is believed to be facing pressure to deliver a more ambitious interconnections program and also reduce its network usage charges.

IPTO’s new network usage charges, which will apply for a four-year period, should be slightly reduced, given the current shape of certain factors, including the country’s investment risk factor, relatively better than in 2014, when network usage charges were last reset, for 2014 to 2017.

However, the preferences of SGCC, the State Grid Corporation of China, a strategic partner of IPTO since early last summer, following its acquisition of a 24 percent stake in the Greek grid operator, will also need to be taken into account. SGCC officials have already begun pushing for an increased rate of return (WACC) on the Chinese firm’s investment.

IPTO has avoided including in its business plan certain interconnection projects that still need to be developed but is expected to face pressure to incorporate one of these, such as the fourth stage of the Cyclades interconnection, or the Dodecanese interconnection. On the other hand, the cost of developing such interconnections at a swifter pace will need to be factored into the operator’s calculations determining the level of network usage tariffs to be paid by consumers.

Authorities are believed to be examining the prospect of establishing a special category for the island interconnection projects which would enable these to first be developed and launched before the operator begins retrieving costs.

Such a solution would prevent consumers from having to pay in advance. Instead, consumers would begin paying increased network usage fees once projects have been completed but, by that stage, the Public Service Compensation (YKO) surcharge, subsidizing high-cost electricity production on Greece’s non-interconnected islands, will have been drastically reduced, offsetting the network usage hike.

The interconnection projects promise to greatly reduce the cost of generating electricity on the islands. High-cost local plants are now being used on the non-interconnected islands.