Energy ministry examining changes to EU-backed CAT plan

The newly appointed Production Reconstruction, Environment and Energy Minister Panayiotis Lafazanis is considering to make revisions to the previous administration’s Capacity Assurance Mechanism, or CATs (Capacity Availability Tickets), that had been approved by the European Commission, according to energypress sources.

The series of meetings over the past few days by government officials with European Union partners, focused on the country’s debt and financing issues, may eventually force the leftist Syriza-led coalition government to reexamine Greece’s EU obligations, but, for the time being, the new administration appears determined to push for changes to the new CAT plan.

According to sources, the plan’s reduced annual cost, down to 225 million euros from 570 millions, following troika pressure, will be maintained. However, the new ministry will seek to change the way this total amount will be distributed. The ministry wants to add more beneficiaries, including all hydropower plants operated by PPC, the Public Power Corporation, and reduce the current plan’s payments for each eligible unit to approximately 25,000 euros per MW from 45,000 euros.

PPC would gain most if such a change is implemented. Based on the previous administration’s EU-approved plan, PPC would receive roughly 55 percent of the 225 million euros, while the other 45 percent would be distributed to independent electricity producers. Revisions to the plan would increase PPC’s share and reduce that of the independent producers, which, according to analysts, would threaten the financial standing of the latter.

In comments made earlier this week, Lafazanis noted that the government’s role is not to protect private-sector interests in the energy sector, but, instead, to offer support to a state-run PPC, the state’s role in electricity production and energy in general, through regulations and frameworks that foster the country’s development and growth, while also supporting society, with environmental concerns intact.

During pre-election campaigning, the Syriza party had condemned the previous administration’s CAT plan, stating that savings could be achieved and utilized for a social policy in the enegy sector.

The electricity market has essentially been left without a mechanism. It is currently regulated by a base system as the validity of the previous higher-cost CAT mechanism expired on December 31, 2014.

The previous administration’s CAT plan envisaged 45,000 euros per MW for natural gas-fueled electricity stations and hydropower stations ensuring grid flexibilility. The plan does not include CATs rewarding power adequacy availability, meaning that lignite-fired stations would not be eligible. Furthermore, according to the plan, revisable CATs will cease applying on November 1 and will be replaced by auctions for flexibility availability purchases.