Despite the package of volume-based discounts approved by the power utility PPC at a shareholders meeting yesterday, the cost of industrial electricity in Greece still remains between ten and twenty euros per MWh higher than in other European countries.
Responding to the news, industrial sector officials have stressed that a series of additional measures promised by the government need to be implemented if benefits lost as a result of the abolishmemt of a previous 20 percent discount on industrial electricty are to be offset.
These measures include the “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 – reduction of the ETMEAR emissions surcharge, and exemption of a special consumption tax on electricity.
The industrial sector has made clear the additional measures are needed if it is to remain sustainable against foreign competition. Local industry expects a further five-euro per MWh electricity cost reduction from the “disruption management” plan; a two-euro per MWh cost reduction from the ETMEAR surcharge drop; and an additional 2.5-euro per MWh cost reduction if the special consumer tax (EFK) is lifted from industrial electricity.
“While the total cost of industrial electricity in Germany is 39 euros per MWh, and less than 50 euros per MWh in the Netherlands and France – without NOME auctions – in Greece, an industrial enterprise consuming 250 GWh – this level concerns four large enterprises in total – will be charged 68 euros per MWh following an 8 percent volume-based discount and emission surcharge revisions, up from 58 euros per MWh in 2014 and 2015,” a market authority commented.
According to PPC’s new plan, the biggest discount, measuring 15 percent, will be offered to industrial consumers using over 2,000 Gwh per year. Industrial enterprises consuming between 1,000 and 2,000 Gwh per year will be offered a discount of 13 percent. Annual industrial consumption between 700 and 1,000 Gwh will be offered a 12 percent discount; 400 to 700 Gwh 10 percent; 200 to 400 Gwh 8 percent; 50 to 200 Gwh 6 percent; and 10 to 50 Gwh 4 percent; while industrial consumption between 0 and 10 Gwh will not be offered any discount.
These rates will create a total of 56 sub-categories to be used as a base in the separate negotiations in progress between PPC and industrial consumers for new deals to apply as of January 1, 2016. The utility’s current electricity agreements with industrial consumers expire at the end of this year.
Market sources acknowledged a small first step has been taken but noted the country’s plan aiming to offer some energy cost relief to the industrial sector is complex and risks being considered as a form of state aid.
A PPC official, commenting on the sidelines of yesterday’s shareholders meeting, did not specify whether the new tariff discount rates will lead to price levels below the marginal cost level, while adding the utility will not disclose its costs.
This is precisely what prompted the European Commission to intervene and abolish the twenty percent discount on industrial electricity, offered by the utility in 2014. The EU executive body had made clear the initiative represented a form of state aid, warning that if not withdrawn, procedures for breach of EU competition rules would be launched.
Greece’s industrial sector fears a repeat. The PPC discounts were announced by Mihalis Veriopoulos, secretary general at the Environment and Energy ministry, and not PPC, raising concerns amid industrial circles that the European Commission will regard the pricing package as a form of state aid.
From its vantage point, PPC contends the new tariff rates are based on models implemented abroad for the industrial sector and cannot lead to any state aid claims. The tariffs are catered to industrial profiles and agreements have already been reached with companies belonging to the Viohalko Group – Sidenor, Corinth Pipeworks, and Halkor – utility officials noted.