NOME model talks marred by disagreements in three areas

Less than a fornight ago, when officials from Greece’s environment and energy ministry had met with the country’s creditor representatives for reform talks, it had been announced that the two sides would work together on a NOME auction model to swiften procedures and have a plan ready within a month for European Commission approval.

However, progress on the NOME auction plan – intended to provide independent wholesalers access to main power utility PPC’s low-cost lignite-fired electricity production, to help end the utility’s dominance in the local market – has reportedly run into problems as the negotiating sides are currently divided by deep differences, energypress sources have informed.

Greek officials have proposed that alternative suppliers taking part in the auctions in search of low-cost electricity will need to be in a position to supply the entire market spectrum being covered by PPC – household, business, industrial and agricultural consumers. This would commit suppliers to sell to consumers enjoying low-cost electricity as well. However, the country’s lenders have fully rejected this PPC proposal and believe suppliers taking part in the NOME auctions should be free to sell electricity amounts acquired to any consumer categories they please.

The Greek proposal also notes that suppliers with leftover electricity amounts purchased at NOME auctions should be able to sell these excess quantities in secondary markets, but without a profit margin. Lenders have also rejected this proposal and insist that suppliers should be able to sell at whatever price they can achieve.

Another difficult matter in the NOME auction negotiations, as had been expected, concerns the starting price and how this will be determined. Actual figures have yet to be discussed as an attempt has not yet been made to determine PPC’s production cost. Instead, the talks on this matter are still at a technical level. Officials have apparently agreed that the average variable cost and not the full production cost will need to be reflected in the starting price. However, disagreement has emerged on PPC’s CO2 emission right costs. Lenders do not want this cost to be factored into the variable cost. Greek officials are insisting it should be included.

Greek government officials appear to believe that the issues separating the two sides could be better handled if the European Commission’s Directorate-General for Energy and Directorate-General for Competition were involved in the negotiations seeking to establish a NOME model. Offering access to PPC’s lignite sources is not just a bailout term involving the country’s lenders but a Greek commitment within the EU, the Greek officials believe.

The matter was reportedly raised at a meeting between energy minister Panos Skourletis and the European Commissioner for Climate Action and Energy Miguel Arias Canete in Brussels last week. Skourletis suggested EU officials should be further engaged in Greece’s ongoing NOME model talks.

Greek officials and lenders appear to have agreed to focus on reducing PPC’s market share to 50 percent by 2020, while a mid-term target for a 25 percent reduction does not appear likely to become legally binding.