NOME plan in doubt, alternatives to be discussed

The NOME auction plan intended to provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources – as part of the bailout-related obligation to help break the utility’s virtual monopoly – appears increasingly unlikely to produce the desired result as PPC’s adamant stance on its declared production costs, too high to give the plan any chance of succeeding, will most likely prompt Greece’s lenders to seek other solutions.

Energy Minister Panos Skourletis and the country’s creditor representatives are scheduled to meet today amid a very unclear picture as to what comes next.

The NOME auction plan, through which PPC would place several hundred MW units of lower cost lignite-generated power up for auction to rival wholesalers to help reduce the utility’s electricity retail market share, initially by 25 percent and then 50 percent by 2020 appears, is bound to fail under the terms PPC is prepared to offer.

The starting price of these auctions is a crucial detail to their success. However, PPC has only slightly softened its position and is willing to drop the starting price it is prepared to accept to about 46 euros per MWh, citing enormous operating costs at its lignite-fired stations. This level is higher than current System Marginal Price (SMP) levels, ranging between 40 and 42 MWh, meaning that wholesalers will shun the NOME auctions.

The NOME auction plan was proposed as a transitional step to be followed by the establishment of partnerships between PPC and private-sector enterprises at both older and new lignite-fired power stations. These new companies would capture market shares.

According to energypress sources, the prospect of cancelling the NOME plan is currently at the core of talks between Greek officials and lenders. Officials are not looking to fine-tune various aspects of the plan, as has been believed.

Should the NOME plan sink, the Greek government will face the danger of seeing PPC’s part-privatization plan return to the negotiating table. Skourletis, in preceding months, had warned this alternative had never been erased from the minds of lenders.