Major energy reforms left for next subtranche from lenders

No major energy-sector reforms have been included in an omnibus bill containing prior actions needed in October for Greece to receive the next two-billion-euro subtranche from its lenders.

The development confirms previous reports that the energy reforms had not been finalized. These energy-sector reforms are intended to open up the electricity market through plans to reduce main power utility PPC’s market share by 25 percent in the immediate future, lower industrial energy costs, and privatize IPTO, the power grid operator, or provide an alternative plan offering equivalent market results, were not ready.

However, the multi-bill does include amendments to a gas market reform bill ending regional gas supply monopolies. All other energy-sector reforms have been left for later and are expected to be linked to the next subtranche from lenders.

The energy ministry has assembled committees to work on a series of energy-sector prior actions demanded by the bailout agreement.

These include new transitionary and permanent CATs; the reintroduction of a Variable Cost Recovery Mechanism, locally acroymed MAMK, to prevent certain power stations from operating below cost by helping cover their start-up costs whenever they are called into action to help meet the grid’s needs; offsetting debt issues between PPC and market operators; gas market reforms; implementation of a “disruption management” plan to enable energy cost savings for major-scale industry in exchange for shifting energy usage to off-peak hours whenever required by IPTO, the power grid operator (an existing pre-Syriza model will be used); PPC cost-based tariff revisions for consumers and the elimination of a 20 percent discount offered to energy-intensive industrial consumers; introduction of NOME-type auctions to reduce PPC’s wholesale and retail market shares by 25 percent by offering wholesalers access to PPC’s low-cost lignite-fired production; and privatization of IPTO, or an alternative plan offering equivalent results.