No results yet on ‘disruption management’ plan funding

The outcome of efforts by a committee assembled to address industrial sector energy costs, with a focus on the funding details of a “power 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 – remains undetermined.

The committee met yesterday for a third and final round of talks to determine when the measure will be launched and who will cover its cost, whose latest estimate ranges between 50 million and 60 million euros per year.

Based on the plan’s current form, already endorsed by the European Commission, the bulk of the “disruption” measure’s cost would be covered by the RES sector. This has prompted a dispute between RES and industrial representatives.

During yesterday’s proceedings, Yiannis Tolios, the General Secretary for Industry, held successive talks with RES and industrial representatives. Both camps were included in the committee.

According to energy sources, talks were constructive but the measure’s implementation “cannot proceed without dissatisfaction for certain parties.”

The Production Reconstruction, Environment and Energy Ministry is faced with the awkward task of implementing the plan and reducing the industrial sector’s energy costs without, however, burdening the RES sector. The latter has already been hit hard by a tariff reduction as part of a wider effort to eliminate the RES special account deficit.

Tolios has two options to present to the Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis, who will make the final decision.

One of these is to propose the “disruption” plan’s implementation as it stands – in the form shaped by the country’s previous administration and approved by the EU – as soon as possible, meaning within the next two to three months. This would cost photovoltaic producers 3.6 percent of their total revenue and wind-energy producers 1.8 percent of their revenues.

The other option is to make revisions to the measure’s funding, with a reduction of RES sector contributions. If such a course is chosen, small-scale photovoltaic producers would be offered the greatest contribution cuts, based on a pledge made by the energy ministry. It remains unknown whether the European Commission will permit any revisions to the original plan.

A third option, which was proposed by certain RES sector represenatives, entails delaying the plan’s implementation until 2016. This could allow the plan to be entirely financed by funds raised from emission tariff auctions which, by 2016, will no longer be injected into the RES special account maintained by LAGIE, the Electricity Market Operator.

The drawback in this case is that an alternative solution will need to be found to reduce the industrial sector’s electricity costs. A rate reduction for the sector by the power utility PPC stands the risk of being deemed as a form of state aid by the European Commission as the rates would fall below production cost levels declared by PPC.