The recently elected leftist Syriza-led coalition’s plan to offer free electricity to 300,000 underprivileged households, which may be ratified today as the government’s first legislative act, could end up further undermining the already troubled financial standing of PPC, the Public Power Corporation, officials at the public utility have told energypress.
Prime Minister Alexis Tsipras has stated the free-electricity plan will be implemented “for symbolic reasons” as a step towards countering the deep recession’s humanitarian crisis. The measure entails covering electricity consumption amounts of up to 1,200 Kwh for every four-month billing period for 300,000 households living under the poverty line.
Prior to the latest negotiations with creditors for a four-month extension to the country’s loan agreement, the government had clarified that the free-electricity plan would not burden PPC but instead would be covered by the state budget. However, the government has emerged from its talks with creditors in search of additional state revenues to cover considerable fiscal gaps. Amid this context, the free-electricity plan’s financing details remain unclear.
Sector authorities tend to agree that PPC, already burdened by an alarming level of unpaid overdue electricity bills owed to it, currently at a level of at least 1.7 billion to 1.8 billion euros, will end up having to assume the measure’s cost, either entirely or partially.
Even if the Greek state ends up officially assuming the free electricity measure’s cost, it is considered highly unlikely that it will be able to pay. For several years now, the state has owed PPC roughly 180 million euros for electricity consumption in the public sector but has not been able to settle the amount.
A sector official, in comments offered to energypress, warned that the free-electricity measure for 300,000 poverty-stricken households could spark a wider refusal by consumers to pay their electricity bills. Current regulations forbid PPC to cut electricity supply to underpriveledged households. These conditions could lead to a further surge in the level of unpaid overdue bills owed to PPC.
At present, the outstanding debt owed to PPC stands as its most significant problem. Besides being a threat to the public utility’s financial standing and its investment plans, the cash-flow problem at PPC also threatens to have wider ramifications on the entire energy sector. Renewable energy sector (RES) producers, for example, are consequently owed significant amounts and many are battling to remain afloat. The government’s free-electricity plan will be closely monitored as a result of all these complications.