Swift action needed for NOME auctions, now likely in October

The upcoming NOME auctions, intended to provide third parties with access to mainpower utility PPC’s low-cost lignite and hydropower sources as a measure to break the utility’s dominance, may be launched towards the end of October, not in September as has been originally anticipated, participants determined at an information day staged yesterday by RAE, the Regulatory Authority for Energy.

The purpose of the session was to discuss auction terms and conditions prepared by LAGIE, the Electricity Market Operator, as part of the NOME plan’s public consultation procedures, which have been given a deadline extention until September 9.

The auction terms still need to be approved by RAE and a new futures market must be established by LAGIE before the NOME auctions are launched.

A total of 150 MWh will need to be made available during the remainder of 2016 if the objective of reducing PPC’s market share to 87.24 percent is to be reached. The power utility’s market share has now fallen to below 90 percent, reaching 89.9 percent in August, according to latest LAGIE figures. The utility’s market share contraction is a bailout demand.

For 2017, the objective is to lower PPC’s market share to 75.24 percent through four auctions offering a total of 676 MWh. PPC’s market share needs to fall to 62.24 percent in 2018 and 49.24 percent by 2019. Auction amounts to be offered in 2018 will be decided in the summer of 2017 and determined by the progress made. If PPC’s market share contraction is behind schedule greater amounts will be offered and vice versa. Theoretically, 733 MWh will need to be offered in 2018 as well as 2019.

At yesterday’s information day session, LAGIE’s representation proposed that the auction bidding be based on a Yankee Auction model, as adopted for the DEPA (Public Gas Corporation) auctions. Through this process, successful bidders do not just pay the amount of the final bid but all top bids made by all participants. Fears that this model could lead to unfair conditions were expressed.

As for the industrial sector, Antonis Kontoleon, president at EVIKEN, the Association of Industrial Energy Consumers, noted that the sector possesses every legal right to challenge a term setting an upper limit on the amount of energy that may be offered to industrial enterprises with consumption levels of more than 13 GWh. Many industrial firms have acquired electricity supply licenses in anticipation of the NOME auctions. Kontoleon stressed that real competition needs to be established amid conditions that will allow even the smallest supplier to provide amounts to the biggest consumer. Otherwise, the procedure will boil down to speculation, he stressed.