A new proposal by main power utility PPC, announced yesterday by its head official, to carve out and sell a new business unit with 400,000 existing customers on board, as part of the bailout-imposed effort to reduce its dominant market share, has been met with reservation by rival companies.
The initiative essentially seeks to wipe out, or at least limit, the market impact of the upcoming NOME auctions, demanded by the international creditors as a tool to intensify competition in the electricity market. PPC is attempting to revise the market reforms procedure in an effort to contain its inevitable losses.
The NOME auctions, whose launch is expected in September, will provide third parties with access to main power utility PPC’s low-cost lignite and hydropower sources.
At this stage, besides the reservation of PPC’s independent rivals, the positions to be adopted by Greece’s international creditors and the European Commission’s competition authorities on the new PPC plan also remain unknown.
The NOME auctions plan was only recently ratified in Greek Parliament as an option that would spare PPC from having to sell business units.
Indpendent firms cannot be expected to open up and adopt clear positions on PPC’s proposed sale of a new unit unless its specifics are set by the utility. In the past, PPC has made various proposals on a number of occasions and taken them back. Examples include the utility’s unfulfilled talk of partnerships in electricity production and the retail market, as was noted by a top-ranked official at a major independent energy firm in comments offered to energypress.
PPC has never really embraced the NOME auctions plan, perceiving it as a relentless way of opening up the market to competition. If PPC incorporates low tariffs over an extended period of at least a year into the new unit it plans to create and sell, then these prices could be more attractive than those to be offered at the NOME auctions, which would subdue interest in the NOME plan and kill it from the onset.
If implemented amid appropriate conditions, the NOME procedure will open up the market to all independent players, big and small, and would not limit its market opportunities to just two or three big guns. This prospect alone makes the NOME auctions a market restructuring tool of far greater worth than PPC’s new proposal.