RAE decision on YKO returns for PPC could prevent hikes

A decision reached last Friday by RAE, the Regulatory Authority for Energy, to limit the main power utility PPC’s Public Service Compensation (YKO) retroactive return, covering 2012 to 2014, to 360 million euros, well under the 735 million euros demanded by the utility, means that electricity consumers may not face any YKO surcharge hikes on their electricity bills.

The balancing out and settlement of older YKO-related amounts was added as a condition to the most recent bailout revision.

A number of other related issues will need to be settled if YKO surcharges for electricity consumers are to be avoided.

Firstly, the finance ministry must approve a request for special consumption tax (EFK) returns to PPC concerning fuel supply to power generation units operating on Greece’s non-interconnected islands. The finance ministry would need to deduct this amount from the national budget and seek an equivalent amount to cover the monetary gap.

Should local authorities manage to find the needed amount, it will need to be endorsed by the country’s lenders.

Also, if an YKO hike for consumers is to be avoided, PPC will need to accept RAE’s decision offering the utility a reduced public service compensation retroactive amount. PPC has made clear its intention to legally challenge any decision that does not satify its claim for 735 million euros. Any legal battle will inevitably complicate matters and lead to an ordeal impacting the RAE decision, and, subsequently, the public service compensation amounts that will need to be imposed on electricity bills.

The YKO surcharge is paid by consumers to primarily subsidize high-cost electricity production on Greece’s non-interconnected islands and also support the Social Residential Tariff (KOT) program offering underpriviledged households subsidies for lower-cost electricity.

KOT program revisions being planned to make more households eligible and also increase discounts will increase the cost of this subsidy program for non-eligible households by 150 million euros, RAE has estimated. The country’s lenders may consider this amount to be excessive and intervene to demand a reduction or even cancellation.