PPC, defying bailout terms, makes new gains in December

The main power utility PPC, already behind on its bailout-required retail electricity market share contraction targets, appears to have gained over one percentage point in December, rising to 85.4 percent from 84.21 percent in November, energypress sources have informed.

The power utility has gained more than two percentage points over the past couple of months. Sources explained that this rise was not only generated by increased customer electricity consumption levels amid the winter season but also by the return of some 70,000 customers to PPC.

PPC’s retail electricity market share, according to bailout terms, was expected to fall to a level of 75.24 percent by the end of 2017, before dropping further, to less than 50 percent by 2020.

State-controlled PPC’s failure to reach its end-of-2017 target ultimately means the government and country have failed to achieve a bailout obligation.

Commenting on the development, sector officials contended that PPC’s resistance against NOME auctions has proven successful so far.

Introduced a little over a year ago as a tool to open up the market by offering independent suppliers access to PPC’s low-cost lignite and hydropower sources, the NOME auctions, alone, do not suffice. Admittedly, without them, independent suppliers would have been driven to the ground given the increased level of wholesale electricity prices.

Higher-than-expected prices generated at the NOME auctions have left little leeway for independent suppliers to pursue attractive pricing policies.

A PPC decision, in the summer of 2016, to offer punctual customers a 15 percent discount has been a key factor in confining the market share growth of competitors, who have been forced to offer similar discounts without necessarily being in a position to do so.

Independent suppliers contend with lower operating expenses than PPC but, on the other hand, face high sales network development and investment costs.

Essentially, PPC has opted to incur losses, reflected in the company’s results, as a means of subduing the development of independent suppliers. This strategy appears to have proven effective so far, but the consequences of the power utility’s failure to reach the bailout targets remain to be seen. The government, ultimately responsible for carrying out Greece’s program, will have some explaining to do to the lenders.