PPC, NOME, target model to preoccupy authorities in the post-bailout era

Commitments and reforms remain pending despite the completion of Greece’s third and final bailout program. A reinforced surveillance mechanism covering not only fiscal, social security and banking matters but also market reform policies, including for the energy sector, will follow the final bailout program, which was completed yesterday, according to an official announcement made by the European Stability Mechanism (ESM), designed to safeguard financial stability in the euro area.

Quarterly surveillance reports will be issued as part of the reinforced effort. These will include assessments of energy sector commitments, including a plan to phase out a RES-supporting supplier surcharge.

Three key energy sector issues will preoccupy authorities in the country’s post-bailout surveillance. The sale procedure and schedule for the main power utility PPC’s disinvestment of lignite-fired power stations and mines, representing 40 percent of the utility’s lignite capacity, will be closely watched.

The role, beyond 2020, of NOME auctions, introduced in Greece two years ago to offer third parties access to PPC’s lower-cost lignite and hydropower sources, will be examined at the end of 2019, once the results of new target-model markets have become clear. Retail electricity market shares will be assessed and a formula will be established to keep the market’s conditions competitive, as was envisioned with the NOME auctions, for the benefit of consumers.

As for the target model, aiming for market coupling, or harmonization of EU wholesale markets, Greece’s lenders have set an April 1, 2019 launch date for the Greek market’s coupling with the Italian and Bulgarian markets. A delay in the introduction of new target-model markets until the summer of 2019 or failure to achieve market coupling before 2020, as has been speculated, would be viewed negatively by the lenders.