The record price level of 48.8 euros per MWh reached at yesterday’s NOME auction will most likely force suppliers to raise prices offered to consumers, market officials agree.
Though this price level does offer local electricity suppliers protection against dangers stemming from rising wholesale electricity prices both in Greece and abroad, it does not provide independent suppliers any leeway to undercut prices offered by the still-dominant main power utility PPC.
The power utility must reduce its retail electricity market share to less than 50 percent by 2020, according to the bailout agreement.
The diminished ability for true competition in Greece’s retail electricity market once again brings to the fore PPC’s 15 percent discount offer for punctual customers, introduced two years ago.
However, unlike previous reactions, the discount’s removal is now not only being called for by independent electricity suppliers but also being considered by PPC.
The power utility’s chief executive Manolis Panagiotakis has not ruled out such a move, while a business plan prepared for PPC by consulting firm McKinsey stresses a need for the client to boost revenues by raising customer tariffs.
Should PPC end or revise downwards its 15 percent discount offer, all suppliers can be expected to respond by increasing their tariff price levels. Over the past couple of years, independent suppliers have had choice but to adjust their tariffs based on standards shaped by PPC’s overaggressive pricing policy.
Besides the role played by local suppliers seeking to cover their domestic market needs, NOME prices were also pushed up yesterday by traders who sought to buy for prospective exports to foreign markets offering considerably higher prices.
Evidently, existing NOME auction regulations are insufficient, as was highlighted by the large quantities acquired yesterday by participants with export activity in mind.
A move by RAE, Regulatory Authority for Energy, on the eve of yesterday’s auction, to summon five suppliers to hearings over NOME export abuse suspicions linked to previous auctions, which could lead to fines, did little, or nothing, to thwart such future intentions at the latest auction.