RAE, the Regulatory Authority for Energy, will hold two plenary sessions this week, tomorrow and Friday, to endorse proposals prepared by energy ministry committees for a series of bailout energy-sector requirements facing an imminent deadline, from a new CAT mechanism to NOME-type auctions. The finalized proposals will then be forwarded to Environment and Energy Minister Panos Skourletis who will present them to the country’s lenders.
In terms of processing, RAE has made most progress on the NOME plan, intended to break main power utility PPC’s market dominance; transitionary and permanent CATs; as well as a plan to reintroduce a Variable Cost Recovery Mechanism, locally acroymed MAMK, aiming to prevent certain power stations from operating below cost by helping cover their start-up costs whenever they are called into action to help meet the grid’s needs.
According to sources, RAE will be ready to present finalized proposals by the end of this week. A detailed NOME plan is expected to be ready. However, it is not yet clear what decisions will be made on the starting price of these auctions, which will offer wholesalers access to PPC’s low-cost lignite-fired electricity production with the aim of reducing the power utility’s retail market share by 25 percent in the immediate future.
The same sources informed that RAE will not propose a specific starting price for the NOME-type auctions, but, instead, will present a formula determining a price level. At this stage it is believed the price level will be set somewhere between the 59 euros per MWh demanded by PPC and the 36 euros per MWh issued by a court verdict.
It remains uncertain whether the NOME plan will suffice to reduce PPC’s market dominance. An initial quantity of between 300 and 400 MW will be offered to the market to test the demand generated by the plan.
Other issues that may prevent consumers from switching suppliers are being looked into by RAE, including a PPC proposal aiming to forbid consumer transfers to new suppliers if outstanding amounts owed to current suppliers have not been settled. RAE has not ruled out the proposal. The authority is examining how other European countries deal with such issues.
The energy ministry will need to present the country’s lenders a schedule detailing how and when 25 percent of PPC’s consumers will switch electricity suppliers. If the NOME auction plan does not generate market interest it will remain just a plan and prompt the implementation of other measures for equivalent results. This could lead to a part-privatization of PPC.