LAGIE wants green certificates to replace supplier surcharge

LAGIE, the Electricity Market Operator, is preparing to present a proposal to the energy ministry that would replace the existing supplier surcharge with a new type of contribution by electricity suppliers to the RES special account, “green certificate” purchases whose cost would reflect respective retail market shares.

The operator’s head official, Mihalis Filippou, informed of the intention at an IENE (Institute of Energy for Southeast Europe) conference yesterday.

According to the LAGIE head, the supplier surcharge is not compatible with market rules and, despite being adopted to counter market distortions, has led to other distortions.

The solution to be proposed will require electricity suppliers to purchase “green certificates” as gurantees of RES origin. These certificates will be issued by LAGIE and auctioned at the prospective energy exchange as one of three types of commodities to be traded at the exchange, while the resulting revenues would be used to financial support the RES special account, according to the proposal.

Regardless of whether this proposal is introduced or not, suppliers will be expected to make financial contributions to the RES special account, which raises the obvious question as to why bother changing the current system in the first place.

According to LAGIE, the new system would be compatible with international market rules, unlike the current supply surcharge, a local initiative. Also, the new system would reflect the RES special account’s real needs, the operator believes. Thirdly, and most importantly, the new system’s “green certificate”costs will be rolled over to consumption prices by all suppliers. This is not the case with the supplier surcharge as PPC, the main power utlility, has refused to pay.

The energy ministry has declared it will use the RES special account’s surplus to reduce the RES-supporting ETMEAR surcharge. The ministry has also described the supplier surcharge as an effective measure, noting it intends to keep it virtually unchanged, except for slight revisions related to the target model, a process entailing the electricity wholesale market’s harmonisation with EU law.