Public service compensation, subsidized power decisions on way

RAE, the Regulatory Authority for Energy, is expected to deliver its finalized proposal on the country’s revised Public Service Compensation (YKO) system, a bailout requirement, within the next few days. The energy ministry will then need to endorse the plan in autumn.

RAE held a meeting on the issue yesterday and will follow-up with an additional session today.

The main power utility PPC is expected to receive a Public Service Compensation (YKO) amount concerning 2012 to 2015 of between 370 million and 400 million euros, which is about half the 740 million euros initially demanded by the utility. PPC, which stands to receive the amount over a five-year period, is expected to legally challenge such a payment decision, meaning the YKO ordeal could be prolonged.

Revisions to the current formula determining YKO payments are also expected. Based on the current formula, for example, consumers who use 2,200 KWh of electricity during any four-month billion period are charged YKO on the entire amount rather than separate rates for the first 2,000 KWh and the exceess 200 KWh amount. Revisions to the current formula will lead to YKO account shortages. The rate imposed on consumption levels of either less than 2,000 KWh of over 3,000 KWh will need to be increased to offset this anticipated shortage.

The YKO surcharge is paid by consumers through electricity bills, primarily to subsidize high-cost electricity production on Greece’s non-interconnected islands.

RAE is also working on revisions to the Social Residential Tariff (KOT) program. Approximately 15 percent of households currently eligible for lower-cost electricity through this subsidies program are expected to no longer qualify once the revisions are made.