PPC not in favor of Varoufakis NOME-type auction proposal

Finance Minister Yiannis Varoufakis has proposed a slightly revised NOME-type auction plan for the electricity market compared to the model shaped by the country’s previous administration, latest information emerging from Greece’s ongoing reform negotiations for a new bailout agreement has indicated.

Although the Production Reconstruction, Environment and Energy Minister Panagiotis Lafazanis has yet to adopt an official position on NOME-type auctions, viewed as a means to open up Greece’s electricity market, the main power utility PPC’s new board has reacted negatively. Even so, PPC’s newly appointed chief executive Manolis Panagiotakis has yet to deliver any statements in response to the NOME-type plan’s latest developments. He is awaiting an announcement from Lafazanis. The two officials share similar policy views.

Last month, when presented to Greek Parliament’s public utilities committee, PPC’s new chief, accompanied by the energy minister, expressed his opposition to the NOME-type auctions. He explained that the procedure would unfairly offer third parties access to cheap PPC electricity. Panagiotakis told the committee that although the procedure could offer temporary relief to some of PPC’s industrial consumers it would eventually lead to the power utility’s debacle. Panagiotakis contended that PPC would be left with the most expensive types of fuel, which would prompt electricity rate increases for all other consumers.

Certain PPC officials apparently maintain a more favorable view of the NOME-type auctions than the power utillity’s board. These officials consider NOME-type auctions to be preferential option for PPC. The other alternative, as part of the reform pressure being applied on Greece to open up its electricity market, would be to surrender a chunk of PPC’s assets, along the lines of the previous Greek government’s plan to part-privatize PPC.

Company officials in favor of the NOME-type plan support that an effort will need to be made to secure a price-level that is not loss-incurring for PPC. Under certain circumstances, NOME-type auctions could offer solutions for PPC, these officials believe.

On another energy-cost front, the government’s consideration of a single VAT rate of 13 percent, which would increase the cost of electricity bills, will not go down well with the Production Reconstruction, Environment and Energy Ministry. Reducing electricity rates has been presented as a key objective by the ministry.