The disarray surrounding a RES-supporting surcharge imposed on electricity suppliers, whose formula has led to much higher-than-expected levels, is clearly troubling the market, especially the independent electricity suppliers and industry.
An upper-limit surcharge proposal of 8 euros per MWh made by LAGIE, the Electricity Market Operator, is being viewed with discontent by the independent electricity suppliers. Though they had initially accepted the surcharge, used to counter the RES special account deficit, its more recent exorbitant levels threaten to destabilize the retail electricity market’s liberalization process.
A decision delivered earlier this week by a Court of First Instance – it issued a restraining order that forbids LAGIE from expelling five independent electricity suppliers from the Suppliers Registry until a final verdict on the surcharge is delivered in March, as long as they keep covering 50 percent of the surcharge amount – demonstrates that the court acknowledges a dangerous market development that has been overseen by market authorities.
Without exception, all the electricity supply companies – main power utility PPC and independent suppliers – are threatened by financial suffocation as a result of the excessive levels stuck over recent weeks by the surcharge, which is revised weekly.
Exploiting its dominant market position, PPC, which controls nearly 90 percent of the electricity retail market, has declared it will stop paying the recently introduced surcharge. The utility knows it cannot be removed from the registry as a result of its electricity supply to 90 percent market of the market.
The developments are proving to be far harsher for the independent suppliers, which have kept up with their surcharge payments. They have put on hold development plans by freezing promotional campaigns and not accepting new customer applications, while drastic action is being considered if clear-cut solutions on the issue are not offered soon by authorities.
At this point, the country’s bailout commitment to increase the market share of independent electricity suppliers is way off target.
“It really is worth wondering as to why regulatory and institutional authorities have not acknowledged an issue that required the Court of First Instance just a few hours to comprehend,” a market official told energypress, whie noting that the legal action taken by the independent suppliers reflects the market’s strained situation.
Five independent electricity suppliers, Volterra, Elpedison, Protergia, Heron and Watt + Volt, took their cases to the court, separately.
Besides the suppliers, industrial enterprises are also concerned, fearing the surcharge will spill over into increased energy costs. Plans by industrial enterprises to increase production and invest are being put on hold.