NOME issue, IPTO split, RES plan discussed with lenders

Energy ministry officials and technical members of the country’s lender institutions discussed pending energy-sector issues yesterday in Athens during the opening session of the latest review of Greece’s bailout agreement reforms.

According to energypress sources, talks rolled smoothly on the planned breakaway of IPTO, the power grid operator, from its parent company PPC, the main power utility, and the new support framework for the renewable energy source (RES) sector.

However, the starting price to be set at the prospective NOME auctions, to offer third parties access to PPC’s low-cost lignite sources as part of the plan to help break PPC’s near-monopoly in Greece’s electricity market, remains an unresolved issue.

An agreement appears to have been reached on the NOME mechanism following certain revisions made by Greek officials.

Participants buying lower-priced electricity at the NOME auctions will be free to sell the electricity amounts purchased to buyers of their choice. In other words, auction participants, or wholesalers, will not be obligated to sell to an entire range of consumer groups, such as household, professional, industrial, and agricultural consumers, as is the case with PPC. Greek officials have pushed for the auction participants to be obligated to cover the range of consumer groups.

Also, wholesalers taking part in the NOME auctions will have the right to sell any excess electricity amounts in the secondary market, even at prices higher than those they had purchased at.

Details concerning the starting price at NOME auctions have yet to be discussed. Figures have not been tabled because an attempt to determine production costs at PPC has not been made. However, the two sides have agreed that the starting price will not cover the entire production cost at PPC, as the utility has demanded, but the average variable cost.

Although the creditor representatives admit that no enterprise should be forced to sell its production at below-cost levels, serious questions have been raised about the actual production cost claims at PPC. The lenders have also asked whether the cost levels declared by the utility, which they believe are excessive, are being checked by any third parties.

On IPTO’s breakway from PPC, the Greek officials informed the creditor representative technical team that two independent consultancy firms, Lazard and SOL, have been hired to evaluate IPTO, whose new version will take on its parent company’s fixed assets (networks).

To date, the creditor representatives have not raised objections, which does not mean the plan being promoted by Greek officials does not contain concerns of practical nature.

Also, the creditor representatives did not disagree on the new RES support framework. The energy ministry had pre-notified the European Commission on the plan prior to the current talks. It is believed to be on the right track, in line with EU guidelines.

Greek officials appear more determined than ever before to settle pending matters with the technical officials before the troika heads arrive in Athens for talks on the next sub-tranche of bailout money to Greece. The lenders appear to be in less of a rush.

Authorities contacted by energypress yesterday made reference to comments by finance minister Euclid Tsakalotos, who believes the lenders, especially the IMF, are delaying the latest review of Greece’s bailout program at a time when the Greek government is keen to press ahead as part of the effort to reinstall economic stability in Greece.