Legislation amendment for delayed new CAT plan pending

The country’s new CAT system has yet to be implemented roughly forty days after the European Commission’s Directorate-General for Competition endorsed the plan, based on a Greek proposal. Its delay has been caused by a pending legislation amendment required to specify the measure’s starting date, according to RAE, the Regulatory Authority for Energy.

The legislation amendment is necessary in addition to the authority’s approval and the signing of a ministerial decision, RAE noted.

According to the Environment and Energy Ministry, it intends to either include this required amendment to one of the draft bills it plans to soon submit to Greek Parliament or attach it to a draft bill to be introduced by one of the other ministries.

The entire process has developed into a saga as electricity production stations, already deprived of CAT payments for output in 2015, have remained unpaid for first-quarter production this year.

Based on the plan endorsed by the European Commission, the new CAT plan, a transitionary measure ahead of a fixed plan, will be valid for 12 months but will not apply retroactively.

Its cost for the 12-month period will total 225 million euros. Its one-year duration will only be fully utilized in the event that the permanent plan is not introduced sooner. However, the replacement plan is apparently also being developed at a snail’s pace, meaning that the initial temporary CAT plan, once launched, will almost definitely run for its full one-year duration.

The country’s new CATs are among the prerequisites for the completion of the ongoing first review of Greece’s third bailout package.

The European Commission is also expecting pre-notification, from the Greek government, of the country’s permanent CAT plan by next month.

The fixed CAT mechanism is expected to be launched no sooner than 2017 and is very likely to be based on a UK model geared by an auction capacity system, without pre-determined prices, as energypress has disclosed.

It is expected that all electricity production units that operate as a fundamental part of the grid – lignite-fired power stations, natural gas-fueled electricity stations, and hydropower facilities – will be able to participate in the auctions. Officials are believed to be currently examining the prospect of not offering payments to amortized facilities, or to significantly reduce compensation levels for older units.

Given that the system’s needs differ every year and that excess installed capacity exists at present, it is believed that an auction-based system will help achieve a balance.