PPC loses legal battle against Hellenic Halyvourgia over power cost hikes

Steel industrial company Hellenic Halyvourgia has scored a legal victory against PPC, the Public Power Corporation, over an electricity cost increase imposed by the latter in 2008. In an historic decision, analyzed in a 36-page document, the Court of First Instance of Athens delivered a legal victory for the industrial company by ruling that PPC must return 4.4 million euros plus interest.

The verdict exclusively concerns Hellenic Halyvourgia and comes following a six-year legal battle launched by the company, independently, against what it considered to be an abusive pricing policy practiced by PPC, whose damages for the firm included the closure of its plant in Aspropyrgos, west of Athens.

The issue began in 2007 with a ministerial decision that liberalized energy supply to industrial plants with high-voltage connections and imposed a ten-percent limit on PPC energy cost increases for industrial companies. The same decision stipulated that when “establishing and amending contracts, PPC should respect the principles of good faith and trade practices and act in a manner that preserves conditions for the development of competition and consumer protection.” One year later, in July, 2008, under the leadership of Takis Athanasopoulos, PPC took full advantage of the upper limit and informed its customers, or all high-voltage industrial consumers, that it was proceeding with a ten-percent increase on supply invoices.

According to the court decision, this initiative taken by PPC was arbitrary and contrary to the provisions of the relevant decrees as PPC took advantage of the fact that there was no other alternative for industrial companies and exploited its power to impose price increases without negotiations, as it ought to have done.

The court decided that the difference in price prompted by the increase – compared to the level that applied prior to July, 2008 – constitutes a loss for the steel manufacturer and needs to be returned by PPC.

Legal circles characterized the Court of First Instance of Athens verdict as being firm and comprised of a series of fundamental aspects:

– Contracts for electricity supply to high-voltage consumers are reciprocal and can only be modified through mutual agreement between supplier and consumer, not unilaterally with detrimental terms for the customer.

– Despite an obligation to begin negotiations in July, 2007, PPC limited its actions to informing, SEV, the Hellenic Association of Industrialists, in June, 2008, of its decision to increase prices and the reasons that led to the price revisions.

– The industrial company had established a relationship of financial dependence with the supplier, in this case the defendant. PPC was aware that its customer did not have any other equivalent solution for electricity supply, as the defendant maintains a dominant position in the supply market for lignite-powered electricity, one that is virtually monopolistic, with a market share in excess of 98 percent, while it also holds a dominant position in the production of electricity.

– The alternative solutions for the industrial company were theoretical and associated with severe handicaps as they did not ensure uninterrupted supply and could have even led to its inability to continue operating.

– Taking advantage of its dominant position over Hellenic Halyvourgia and the company’s consequent inability to find an equivalent alternative that could serve its interests, PPC imposed an arbitrary price increase.

– The overall behavior of the supplier amounted to exploitation of power in order to impose arbitrary trading conditions, contrary to moral values, which resulted in damaging the competitiveness of a dependant customer.

– The verdict acknowledges that there was no price agreement as of July 1, 2008 between Hellenic Halyvourgia and PPC.

As stated in the verdict, Hellenic Halyvourgia was awarded compensation of 2.551 million euros for electricity cost increases paid by the company for its industrial plant in Velestino, Thessalia, in Greece’s mid-north, as well as 1.86 million euros for its Aspropyrgos plant. The court ruled that the defendant must pay Hellenic Halyvourgia the sum of 4,412,018.86 euros, plus interest.