Main power utility PPC’s decision, announced yesterday, to offer 15 percent discounts as of July 1 to customers with punctual electricity bill payment records, an aggressive move in terms of competition, contravenes the country’s third-bailout obligation of reducing the utility’s market share to less than 75 percent in 2018 and under 50 percent by 2020.
The 15 percent discount offer, which goes beyond the utility’s original intention of offering a 10 percent discount, strongly suggests that the government will offset the move through low starting prices at the upcoming NOME auctions, to provide third parties with access to PPC’s low-cost lignite and hydropower sources as part of the bailout-related obligation to help break the utility’s dominance.
Given the fact that failure by Greece to reduce PPC’s market dominance will prompt the country’s international creditors to bring back to the table an older plan entailing the part-privatization of PPC, through which a 30 percent stake would be sold, the leeway for any maneuvering is minimal at best.
The utility’s discount offer is not only intended to limit the number of customers – those with the best payment records, at that – who plan to switch to rival electricity suppliers. It also comes as part of an effort by energy minister Panos Skourletis to portray himself as a politician whose policies are sensitive to working class concerns, his objective being to make less painful the harsh bailout-related reforms and measures being implemented.
The starting price to be offered at the NOME auctions will be the most crucial factor to their success. A ministerial decision specifying the NOME auction details and procedures, including the starting price, will need to be delivered by the end of June.
Other less crucial factors to help determine the success of the NOME plan include the electricity amounts auction participants will be permitted to purchase, as a percentage of their respective total energy amounts traded, and payment details, including timing.
Low NOME auction starting prices will be needed to help independent suppliers seeking market share gains compete against PPC’s reduced prices offered by the 15 percent discount.
The first auction will need to be staged by the end of September, while delivery of electricity purchases must be made by the fourth quarter of this year. Therefore, the picture will be clear by September, when competition in the electricity retail market will have begun in earnest.