Main power utility’s 15 percent discount on electricity rates as of July 1 to customers with punctual payment records, announced yesterday, has been met with disapproval and suspicion by rival independent electricity suppliers, who noted that the utility, by taking such initiatives, is closing the market to competition, not opening it up, as is expected by bailout obligations.
Independent electricity suppliers were quick to point out that they still do not possess weapons of equivalent strength to compete against PPC on equal terms – meaning access to low-cost lignite and hydropower sources controlled by the utility.
“The move shows PPC has not understood that a bailout obligation exists and demands that the utility reduce its market share by 25 percent by 2018,” one market official noted, while also suggesting that all necesssary action would be taken to protect his company’s interests.
Certain officials noted that PPC could have waited to reduce its prices in September, when the first NOME auction is scheduled to be held, providing third parties with access to PPC’s low-cost lignite and hydropower sources, and, as a result, fair competition in Greece’s electricity market.
In general, independent electricity suppliers are not expected to sit back and observe the developments. Company officials said meetings would be held with their commercial and legal departments and decisions would then be made.
Although the electricity discount offer made by PPC’s head Manolis Panagiotakis had been anticipated, its size surprised certain officials. By offering 15 percent discounts to customers with punctual payment records, including those inducted into installment-based payback programs for arrears, PPC hopes to limit the sharp market share gains made by rivals, who are currently gaining about one percent of the retail electricity market, overall, per month. Market data for April showed independent electricity suppliers had captured 8.62 percent of the retail electricity market.
Yesterday’s move by PPC to offer substantially lower prices to punctual customers intends to help the utility hold on to reliable customers and also complements a decision announced just days ago by energy minister Panos Skourletis, blocking customers with arrears at PPC from switching to rival suppliers. This latter move is intended to also keep the less reliable customers at PPC. In other words, the strategy being pursued at PPC is operating on two fronts and seeks to hold on to the good and the bad. It remains to be seen if these moves will slow down the outflow of customers from the utility to rival electricity suppliers.
An analysis of PPC’s 15 percent discount offered on electricity rates shows that the actual discount ends up being less than ten percent as various surcharges included in electricity bills, such as a RES-supporting ETMEAR charge and Public Service Compensation (YKO), make up roughly half the total payable amount.