The development of a new permanent CAT mechanism to apply as of 2016 appears to be headed for a longer extension than those concerning other energy-sector prior actions needed for the next subtranche from the country’s lenders.
According to energypress sources, lender representatives have acknowledged that the effort to establish a new CAT mechanism requires additional time and, as a result, given permission to RAE, the Regulatory Authority for Energy, and IPTO, the power grid operator, the two Greek authorities currently working on the plan, to stretch their submission date beyond the end of October, when the finalized CAT plan was expected.
Greece’s final proposals on the NOME-type auction model, intended to reduce main power utility PPC’s electricity retail market share, as well as an alternative to the IPTO privatization plan, will need to be delivered by the end of October.
Meanwhile, a temporary CAT mechanism for 2015, to be applied retroactively and cover a six-month payment period for electricity producers, has been prepared and endorsed by the country’s lenders. It had been prepared by energy minister Panos Skourletis prior to the recent elections and delivered to the European Commission. Legislative procedures may be needed to implement this temporary CAT mechanism.
As for the permanent mechanism to be introduced in 2016, energypress sources noted it may be based on a UK model involving auctions rather than a set price. Officials believe an auction-based CAT plan could be more suitable as it would provide flexibility to a market whose needs differ each year.
According to this plan, fundamental electricity production facilities (lignite-fired, natural gas-fueled, and hydropower) will be able to take part in the auctions. Consideration is being given to the idea of not compensating amortized facilities, or drastically lowering payments for older units, based on a European Commission request. Capacity availability will definitely be compensated.
The objective is to come up with a plan that may allow the market to operate without the need for revisions or interventions, or any distortions, for at least the next two to three years.