The main power utility PPC is being pressured to offer significantly greater electricity amounts to the market through its just-introduced NOME auctions, talks betwen the country’s representatives and government officials, as part of the bailout’s second review, have indicated.
Emerging from a meeting with the lenders yesterday, the recently appointed energy minister Giorgos Stathakis remained tight-lipped on the issue, limiting his comments to a “pending issue concerning the auctions” is being discussed.
According to energypress sources, the lenders want main power utility PPC to offer an accumulation of the electricity amounts agreed to for 2016 and 2017 through the NOME auctions to be held in 2017.
The bailout’s terms, requiring electricity auction amounts to be offered as a percentage of last year’s total consumption in Greece, set the annual proportions at 8 percent for 2016 (460 MWh) and 15 percent for 2017 (675 MWh).
However, the lenders are interpreting these terms differently. They are now demanding that a 23 percent proportion, the total of 2016 and 2017, or 1,135 MWh, be offered through the auctions next year. This essentially means that this year’s amount of 460 MWh, made available and absorbed last month through the inaugural NOME auction, will need to be offered for a second time in 2017.
Greek officials insist that the NOME auction terms include a clause requiring adjustments based on the degree to which market objectives have been met. The government officials have also questioned whether larger electricity amounts can be fully absorbed by the market’s players, noting that excess amounts could be exported to cause domestic market distortions.
The objective of the just-introduced NOME auctions is to provide third parties with access to PPC’s low-cost lignite and hydropower sources as a measure to help break the utility’s market dominance.
As for the auction starting price level, another issue raised by the lenders, it appears that the two sides have agreed to reexamine and reset the level once a year, every June, taking into account PPC’s cost-related data and the forward price for CO2 emission allowance prices.
A ministerial decision reached in September by the just-replaced energy minister Panos Skourletis, setting the NOME starting price at 37.37 euros, did not specify when and under what conditions this price level would be revised.
If CO2 emission allowance prices fall, as has been forecast, PPC, which is seeking to raise the NOME starting price level, will end up having to lower it instead. The utility has already filed its case at the Council of State, Greece’s Supreme Administrative Court. Asked yesterday about PPC’s legal initiative, Stathakis, the new energy minister, refused to comment.
The lenders expect RAE, the Regulatory Authority for Energy, to deliver a schedule specifying the electricity quantities to be auctioned off in 2017 and the dates of auction sessions.
A second auction during the remainder of 2016 appears highly unlikely. The plan for 2017 will most likely be announced late next month. The first auction in 2017 is expected to be held within the first two months of the year.