IPTO split, NOME auctions, temporary CATs on superbill

Legislation amendments for the power grid operator IPTO’s split from parent company PPC, the main power utility, as well as the introductions of NOME-type auctions and a transitional CAT mechanism to compensate power stations for production, will be included in a bailout-related superbill headed to Greek Parliament today ahead of ratification this coming Sunday.

These measures need to be legislated prior to the next Eurogroup meeting on May 24 as part of the effort to complete the first review of Greece’s third bailout deal.

According to energypress sources, no changes have been made to the drafts prepared for the IPTO and NOME auction plans, compared to the content leaked just days ago. Also, the temporary CAT mechanism’s draft is identical to the plan proposed by the Greek government and endorsed by the European Commission’s Directorate-General for Competition.

Previous laws for the IPTO and NOME auctions will be nullified along with the ratification of the amendments.

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.

As part of the IPTO breakaway plan, PPC shareholders will need to approve the sale of at least a 20 percent share to a strategic investor. A tender for strategic investor offers will need to begin this June, while the selection process must be completed a few months later, by October.

If Greece’s international lenders deem the IPTO plan’s progress in 2016 as unsatisfactory, especially on matters concerning the choice of a strategic investor, then the Greek State will need to set a date for the submission of binding offers pertaining to the sale of PPC’s entire stake in IPTO, in other words 100 percent.

The NOME plan, based on a French model, is expected to lead to a 20 percent reduction of PPC’s wholesale and retail market shares by 2017 followed by a further decline, below 50 percent, by 2020.

The temporary CAT mechanism approved by Brussels will be valid for 12 months and will not apply retroactively. The mechanism’s cost for the 12-month period is 225 million euros. Producers will be compensated 45,000 euros per MW. The mechanism’s one-year duration will only be fully utilized in the event that the permanent plan is not introduced sooner. Progress on the replacement plan is believed to be moving along slowly, meaning that the temporary CAT plan, once launched, will almost definitely run for its full one-year duration.